All Else Constant, the Net Present Value of a Project

question 45

Multiple Choice

All else constant, the net present value of a project increases when:

• A) The discount rate increases.
• B) Each cash inflow is delayed by one year.
• C) The initial cost of a project increases.
• D) The rate of return decreases.
• E) All cash inflows occur during the last year of a project's life instead of periodically throughout the life of the project.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, represented as a financial charge or fee.

Equity Multiplier

A financial ratio that measures the amount of a company’s assets financed by its shareholders' equity, indicating leverage.

Assets Support

Refers to the financial or operational support provided to maintain or enhance the value of a company's assets.