Assuming that all other factors are constant except one, the net present value of a...

Explanation

Net present value (NPV) is the 'today' net value that deprives from 'future' cash flow of an invest-ment or a capital purchase.

The following formula is used to calculate NPV

Chart Description automatically generated with low confidence

Where:

Rt is the net cash flow (cash inflow - cash outflow) during the period t

i is the discount rate

t is the number of time periods

As you can conclude from the above formula, the net present value increases when the numerators (net cash flows) increase and/or denominators (1+i) decrease. So the correct answer should be "Net cash flow during a time period increases"

The purpose of this exercise is to help you identify the factors that influence the net present value and how to increase/decrease NPV in real-world scenario.