Question
You have just completed the forecasting process for a new project, and computed the projects net present value to be ($500,000). You then want to
You have just completed the forecasting process for a new project, and computed the projects net present value to be ($500,000). You then want to understand the effect on this new projects net present value of a $500,000 after-tax cash flow increase in time period 3. Will the projects revised NPV be greater than 0, equal to 0, or less than 0? Explain your answer carefully. No calculations are required.
If a projects NPV is positive using a 10% discount rate, what happens to the project's NPV if the discount rate is changed to 8%? Briefly explain your answer.
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