The net present value:
1) decreases as the required rate of return increases. 2) is equal to the initial investment when the internal rate of return is equal to the required return. 3) method of analysis cannot be applied to mutually exclusive projects. 4) is directly related to the discount rate. 5) is unaffected by the timing of an investment’s cash flows.
The net present value:
1) decreases as the required rate of return increases.
Explanation to the above answer:
If the rate of return increases then the present value of future cash flow decreases so net present value decreases on the other hand if the rate of return decreases then the present value of future cash flow increases so net present value increases .NPV has direct relationship with required rate of return.
