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Which ofthe following statements is true regarding net present value? A. NPV decreases as the required...

Which ofthe following statements is true regarding net present value?

A. NPV decreases as the required return on the project increases
B. NPV decreases as the discount rate decreases
C. NPV is unaffected by the timing of the project’s cash flows.
D. NPV is equal to the initial investment when the required return is equal to the IRR
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Answer #1

Answer is Option A

NPV is inversely proportional to required return on project. Increase in required return would lead to decrease in NPV. Hence, statement A is correct, B is false.

NPV is affected by timing of the cash flows. So, option c is correct.

when required return = IRR, NPV would be zero.

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