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Which of the following would decrease the NPV of a project? Group of answer choices A...

Which of the following would decrease the NPV of a project? Group of answer choices

A decrease in net working capital requirements.

An increase in the required return on the project.

A shift from straight depreciation to accelerated depreciation.

None of the above.

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Homework Answers

Answer #1

NPV = Present Value of Cash Inflow - Initial Outlay

Now, Present Value is calculated by dividing the Future Cash Flow by Required Rate of Return. When the required rate of return increase, the NPV decreases and vice-versa.

Therefore, Option 2 is correct. An increase in the required return on the project.

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