In capital budgeting, what will be the effect on the following if there is an in

Question

In capital budgeting, what will be the effect on the following if there is an increase in the working capital needed for a project? A. Net Present Value and Internal Rate of Return will both decrease B. Net Present Value will not be effected and Internal Rate of Return will decrease C. Net Present Value will decrease and Internal Rate of Return will not be effected D. Net Present Value will increase and Internal Rate of Return will not be effected E. Net Present Value and Internal Rate of Return will not be effected

Explanation / Answer

Hi, If you like my answer, please rate my answer first and according to my answer...that way only I can earn points. Thanks A. Net Present Value and Internal Rate of Return will both decrease NPV falls for sure, and since NPV is fallen, A lower IRR would be needed to make this NPV to 0

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