Consider a project with an initial investment and positive future cash flows. As the discount rate is increased:

c. IRR remains constant while the NPV decreases

Explanation:

IRR is the discount rate that will bring the present value of the investment to zero. This rate will not change therefore due to a change in discount rate. It will only change due to factors like the cashflow amount and the time horizon of the project.

NPV on the other hand is the present value of the project given a certain discount rate ( rate of return). As a result, when the discount rate increases, the NPV will decrease because the cashflows will be getting discounted at a higher rate.

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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