All Else Constant, the Net Present Value of a Project

question 221

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:

Master Budget

The master budget is a comprehensive financial planning document that consolidates all of a company's individual budgets, outlining its financial goals and plans.

Merchandising Company

A type of business that purchases finished goods for resale, making profits by selling these products at higher prices than their purchase costs.

Purchases Budget

A financial plan that estimates the cost and amount of goods or materials a company needs to buy over a specific period to meet its operational goals.

Sales Budget

A detailed projection of a company's sales for a future period, typically broken down by product line, region, or sales team.