A(n) in the discount rate will a project's NPV

Finance Dec 24, 2020

A(n) in the discount rate will a project's NPV. o increase; decrease O decrease; decrease O increase; increase none of the above

Expert Solution

Correct option is (a) increase; decrease

As NPV and the Discount rate are reverse of each other because , when the discount rate increases the cash flow will get reduce and henceforth the NPV will decrease too.

And when the discount rate decrease the NPV will increase.

Hence option (b), (c) are incorrect as both talk about being similar effect.

Option (d) is also incorrect.

So, the option (a) is correct.

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