The net present value: is inversely related to the discount rate. is equal to th

Question

The net present value:

is inversely related to the discount rate.

is equal to the initial investment when the internal rate of return is equal to the required return.

is unaffected by the timing of the related cash flows.

increases as the required rate of return increases.

method of analysis cannot be applied to mutually exclusive projects.

is inversely related to the discount rate.

is equal to the initial investment when the internal rate of return is equal to the required return.

is unaffected by the timing of the related cash flows.

increases as the required rate of return increases.

method of analysis cannot be applied to mutually exclusive projects.

Explanation / Answer

The net present value:

Reason:- As the discount rate increases NPV decreases and as the discount rate decreases NPV increases. So NPV is inversely related to discount rate.

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