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BakWards has a new investment project that will cost $90,000 and allow the company to produce positive future cash flows of $15,000 per year for
BakWards has a new investment project that will cost $90,000 and allow the company to produce positive future cash flows of $15,000 per year for the next 10 years. At a required return of 7.8%, the project produces a positive NPV of $11,565.55. Based on these calculations, BakWards has decided to invest. However, prior to investing. BakWards other projects become more valuable, which results in the required return for the project increasing to 12.5%. How will this increased required return change NPV and IRR, if at all? NPV increases, IRR decreases NPV decreases, IRR stays the same NPV decreases, IRR increases NPV increases, IRR stays the same
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