Question: If a company uses a 1 3 . 5 % discount rate with the net present value method, and then does the same analysis, but

If a company uses a

13.5 %

discount rate with the net present value method, and then does the same analysis, but with a

15.5 %

discount rate, which of the following is likely to occur? The

13.5 %

rate will show the project is more profitable than the

15.5 %

rate. The

15.5 %

rate will show the project is more profitable than the

13.5 %

rate. The relative profitability of the two studies depends only on the timing of the cash flows, not on the discount rate. Both rates will produce the same net present value.

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