For a project with normal cash flows its NPV will if its cos

For a project with normal cash flows, its NPV will if its cost of capital gets lower A) Increase B) Decrease C) Increase and then decrease D) Decrease and then increase

Solution

A.Increase.

For a project with normal cash flows, its NPV will increase if its cost of capital gets lower.

There is an inverse relationship between cost of capital and NPV, i.e NPV increases as the cost of capital is lowered and vice versa.