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    Question

    A project has IRR of 14% and NPV of ₹5 lakhs at 10%

    cost of capital. If cost of capital rises to 16%, what will happen to NPV?
    A Increase Correct Answer Incorrect Answer
    B Decrease Correct Answer Incorrect Answer
    C Remain same Correct Answer Incorrect Answer
    D Zero Correct Answer Incorrect Answer

    Solution

    As discount rate increases, NPV decreases (inverse relationship).

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