Which of the Following Would Decrease the Net Present Value

question 25

Multiple Choice

Which of the following would decrease the net present value of a project?

• A) A decrease in the income tax rate.
• B) A decrease in the initial investment.
• C) An increase in the useful life of the project.
• D) An increase in the discount rate.

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Definitions:

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its expected useful life.

Serial Bond

A type of bond that matures in installments over a period of time rather than having a single maturity date.

Principal

The initial amount of money borrowed or invested, excluding any interest or dividends.

Installments

Regular, often monthly, payments made towards settling a debt or purchasing a product over time.