Which of the following have the potential to increase the net present value of a proposed investment? i. ability to immediately shut down a project should the project become unprofitable ii. ability to wait until the economy improves before making the investment iii. option to place the investment on hold until a more favorable discount rate becomes available iv. option to increase production beyond that initially projected

The following have the potential to increase the net present value of a proposed investment:

I. Ability to immediately shut down a project should the project become unprofitable.

II. Ability to wait until the economy improves before making the investment.

III. Option to place the investment on hold until a more favorable discount rate becomes available.

IV. Option to increase production beyond that initially projected.

Explanation:

Net present value (NPV) in rudimentary terms can be defined as the difference between the present value of cash inflows and the present value of cash outflows proposed over a duration.

NPV is used in capital and investment planning to examine the gain of a projected investment.

Thus the above given factors are thoroughly responsible or have the potential to increase the NPV of a proposed investment.

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