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Conceptual Overview: Explore how the cost of capital affects the net present value of an...

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Accounting

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Conceptual Overview: Explore how the cost of capital affects the net present value of an investment project's decreasing cash flow. NPV - CF + EASY - -$1,000+ - +596 + $%+ 300 $78.82 NIV (5) Cost of 1. What is the approximate IRR for the cash flow curve depicted? a. 5% b. 10% C. 15% d. 20% -Select- 2. When the cost of capital is less than a project's IRR, the NPV for the project is a. negative b. equals the project's IRR C. positive d. cannot be determined 3. If the cost of capital increases, the NPV for the project a. increases b. stays the same C. decreases d. cannot be determined 4. In the unrealistic situion 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

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