You have just completed the forecasting process for a new project, and computed the project’s net present value to be ($500,000). You then want to understand the effect on this new project’s net present value of a $500,000 after-tax cash flow increase in time period 3. Will the project’s revised NPV be greater than 0, equal to 0, or less than 0? Explain your answer carefully. No calculations are required.

If a project’s NPV is positive using a 10% discount rate, what happens to the project's NPV if the discount rate is changed to 8%? Briefly explain your answer.