Respuesta :
Answer: The following have the potential to increase the net present value of a proposed investment:
I. Ability to immediately shut down a project should the project become unprofitable.
II. Ability to wait until the economy improves before making the investment.
III. Option to place the investment on hold until a more favorable discount rate becomes available.
IV. Option to increase production beyond that initially projected.
Explanation:
Net present value (NPV) in rudimentary terms can be defined as the difference between the present value of cash inflows and the present value of cash outflows proposed over a duration.
NPV is used in capital and investment planning to examine the gain of a projected investment.
Thus the above given factors are thoroughly responsible or have the potential to increase the NPV of a proposed investment.
