How does the impact of higher rate of inflation on the desired cash balances in a multi-year project affect project cost in present value terms?

A. It initially leads to a decrease in project net cash flow but balances it out by reducing the net cash flow in the final year but does not change the net present value

B. It reduces the net present value of the project

C. It increases the net present value of the project

D. It initially leads to an increase in project net cash flow but balances it out by improving the net cash flow in the final year but does not change the net present value