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You have just assessed a project involving an immediate cash outflow followed by a series of cash inflows over the next seven years, by deducing the net present value (NPV) and the internal rate of return (IRR). You have now discovered that you have underestimated the discount rate. Correcting for the underestimation will have which one of the following effects, relative to your original deductions? A. No change in either the NPV or IRR. B. Reduction in the NPV and no change in the IRR. C. Increase in both the NPV and the IRR. D. Increase in the NPV and a reduction in the IRR.
Sagot :
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