#2

Suppose you calculate the Net Present Value (NPV) for a project, given the project cash flows and a required rate of return of 12%. After you calculate the NPV, you discover that the actual required rate of return is 14%. The new NPV you calculate using a required rate of return of 14% would be

		a. lower than the NPV calculated with a required rate of return of 12%.
		b. higher than the NPV calculated with a required rate of return of 12%.
		c. the same as the NPV calculated with a required rate of return of 12%.
		d. uncertain because it could be either lower or higher than the NPV calculated with a required rate of return of 12%.