A capital budgeting project has inflows of 300 for 5 years, and an initial investment of 1,200. However, management recently decided to reduce the size of the capital budgeting project. The initial investment will decrease by 180 to 1,020 and the cash inflows will decrease by 40 to 260. As a result, in comparison to the original NPV profile, the horizontal intercept of the NPV profile for this reduced capital budgeting project shifts:

Multiple Choice

• right and the vertical intercept shifts down.

• right and the vertical intercept shifts up.

• left and the vertical intercept shifts up.