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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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