What Happens to the NPV of a One-Year Project If

question 45

Multiple Choice

What happens to the NPV of a one-year project if fixed costs are increased from $400 to $600, the firm is profitable, has a 15 percent tax rate and employs a 12 percent cost of capital?

• A)NPV decreases by $200.00
• B)NPV decreases by $173.91
• C)NPV decreases by $130.00
• D)NPV decreases by $151.79

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