Question: Question 14 Devril plc is considering the investment in a project that has an initial cash outlay followed by a series of net cash inflows.

Question 14 Devril plc is considering the investment in a project that has an initial cash outlay followed by a series of net cash inflows. The business applied the NPV and IRR methods to evaluate the proposal but, after the evaluation had been undertaken, it was found that the correct cost of capital figure was lower than that used in the evaluation. What will be the effect of correcting for this error on the NPV and IRR figures? Effect on A) B) C) D) E) NPV Decrease Decrease Increase Increase Increase IRR Decrease No change Increase No Change Decrease D

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