You are head of Corporate Finance at a furniture distribution firm that is thinking of signing a deal to import furniture from India. Your team is creating an NPV model to determine the value of the potential deal. Your team forecasts Year 1 Sales from this deal at USD 4 million. Your firm's historical EBIT Margin (Operating Margin) has been 30%, which provides a Year 1 Cash Flow of USD 1.2 million in the NPV model. You inform your team that you expect there to be increased transportation, storage, and labor costs, thereby lowering the EBIT Margin to 25%. To reflect that, your team revises the model to a Year 1 Cash Flow of USD 1 million.

What effect does that have?

Group of answer choices

The NPV increases

The NPV decreases

None of the above