Consider a Project with an Initial Investment and Positive Future

question 209

Multiple Choice

Consider a project with an initial investment and positive future cash flows. As the discount rate is increased the ___________________.

• A) IRR remains constant while the NPV increases
• B) IRR decreases while the NPV remains constant
• C) IRR remains constant while the NPV decreases
• D) IRR increases while the NPV remains constant
• E) IRR decreases while the NPV decreases

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Definitions:

Net Working Capital Turnover

A measure of how effectively a company uses its net working capital to generate sales.

Total Fixed Assets

The combined value of all long-term assets that a company owns, which are not expected to be converted to cash within a year.

Long-Term Liabilities

Long-term liabilities are debts or obligations that are due more than one year in the future, impacting a company's long-term financial sustainability and planning.

Debt-Equity Ratio

The comparative measure of equity and debt in the financing framework for a company's assets.