Question

The net present value: Multiple Choice decreases as the required rate of return increases. is equal to the initial investment when the internal rate of return is equal to the required return. method of analysis cannot be applied to mutually exclusive projects. ignores cash flows that are distant in the future. is unaffected by the timing of an investment's cash flows.

Answer 1

Answer:

The answer is A. as the required rate of return increases

Explanation:

Net present value (NPV) is that the difference between the today's value of future cashflow inflows and also the present value of future outflows.

Required rate of return is the expected return or compensation investors are expecting from their invested money or fund.

If what the investors are expecting from their investment are much, this will decrease the net present value of the project and if it is lower it will increase the net present value of the investment because lower rate will be use to discount the future cash flows.