All else constant, the net present value of a typical investment

project increases when:

the initial cost of a project increases.

the rate of return decreases.

the discount rate increases.

all cash inflows occur during the last year instead of

periodically throughout a project’s life.

each cash inflow is delayed by one year.

## Answer

**Answer: the rate of return decreases.**

Explanation to the

above answer

If all other factor remain constant, the net present value of a

typical investment project increases when required rate of return

decreases. It means present value increase if the required rate of

return decreases