According to the given statement, a project with an initial cash outflow followed by five years of cash inflows must also change in order for the timing of the cash flows to remain the same and the PV to remain constant.
C is the right option.
Cash flow refers to the amount of cash or cash-equivalent that a business receives or transfers as payment(s) to creditors. Analyzing the company's liquidity position frequently involves using cash flow analysis.
Understanding cash flow is essential because it allows you to pin down your sources of income and expenditure habits. With this knowledge, you can act appropriately to keep a positive cash flow and in the long run achieve your financial goals.
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What effect will an increase in the discount rate have on the present value of a project that has an initial cash outflow followed by five years of cash inflows?
A. There will be no effect on the PV.
B. The PV will change but the direction of the change is unknown.
C. The PV will remain the same as the timing of the cash flows must change also.
D. The PV will increase.
E .The PV will decrease.
