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You are reviewing a profitable investment project that has a conventional cash flow pattern. Suppose that the cash flows for the project, initial outlay, and future after-tax cash flows all double, you would predict that

  1. the IRR would increase? decrease? stay the same?
  2. the NPV would increase? decrease? stay the same?

Can you make up an arbitrary cash flow example, calculate IRR and NPV. Then double the Cash flows and calculate the new IRR and NPV, and check if your predictions are correct?

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  • Category:- Basic Finance
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