Conceptual Overview: Explore how the cost of capital affects the net present value of an investment project's increasing cash flow. returns increasing amounts after the invel investment. Drag left or right on the graph to move the cursors to $980$ the net present value $($NPV$)$ for different costs of capital, The point where the curve

$NPV=C{F}_0+{\displaystyle \underset{l=1}{\overset{N}{}}}\frac{C{F}_i}{(1+r{)}^1}=-$$$1,000+\frac{\text{\$}100}{(1+0\mathrm{.}1000{)}^1}+\frac{\text{\$}300}{(1+0\mathrm{.}1000{)}^2}+\frac{\text{\$}400}{(1+0\mathrm{.}1000{)}^3}+\frac{\text{\$}675}{(1+0\mathrm{.}1000{)}^7}=$$$100\mathrm{.}40$

What is the approximate IRR for the cash flow curve depicted?

a$.10\%$

b$.13\mathrm{.}5\%$

c$.15\%$

d$.17,5\%$

seset$-0$

When the cost of capital is greater than a project's IRR, the NPV for the project is

a$.$ negative

equals the project's IRR

c$.$ positive

d$.$ cannot be determined

$-5$ninet$-$ B

If the cost of capital decreases, the NPV for the project

a$.$ increases

b$.$ stays the same

c$.$ decreases

d$.$ cannot be determined

Stiect$-B$

In the unrealstic situien in which the cost of capital were zero, the NPV of the project

a$.$ is the sum of the cash flows

b$.$ is the upper limit for the NPV of the project

c$.$ both of the above statements are correct

d$.$ neither of the first two statements is correctConceptual Overview: Explore how the cost of capital affects the net present value of an investment project's increasing cash flow. returns increasing amounts after the invel investment. Drag left or right on the graph to move the cursors to $980$ the net present value $($NPV$)$ for different costs of capital, The point where the curve

$NPV=C{F}_0+{\displaystyle \underset{l=1}{\overset{N}{}}}\frac{C{F}_i}{(1+r{)}^1}=-$$$1,000+\frac{\text{\$}100}{(1+0\mathrm{.}1000{)}^1}+\frac{\text{\$}300}{(1+0\mathrm{.}1000{)}^2}+\frac{\text{\$}400}{(1+0\mathrm{.}1000{)}^3}+\frac{\text{\$}675}{(1+0\mathrm{.}1000{)}^7}=$$$100\mathrm{.}40$

What is the approximate IRR for the cash flow curve depicted?

a$.10\%$

b$.13\mathrm{.}5\%$

c$.15\%$

d$.17,5\%$

seset$-0$

When the cost of capital is greater than a project's IRR, the NPV for the project is

a$.$ negative

equals the project's IRR

c$.$ positive

d$.$ cannot be determined

$-5$ninet$-$ B

If the cost of capital decreases, the NPV for the project

a$.$ increases

b$.$ stays the same

c$.$ decreases

d$.$ cannot be determined

Stiect$-B$

In the unrealstic situien in which the cost of capital were zero, the NPV of the project

a$.$ is the sum of the cash flows

b$.$ is the upper limit for the NPV of the project

c$.$ both of the above statements are correct

d$.$ neither of the first two statements is correct