4. What is the effect on the NPV (choose: increases, decreases or no effect) calculation for a proposed capital project with a 25 year service life and 7 year construction period (typical for a chemical plant) with the highest revenue received in the last 5 years when.

a) the discount rate or WACC for the firm is increased (all other model inputs stay the same). Answer:

b) the service life of the proposed project is increased to 35 years (all other model inputs stay the same). Answer:

c) the highest revenue is received in the first five years (all other model inputs stay the same). Answer:

d) the construction period is increased to 10 years. (all other model inputs stay the same). Answer: