You have just assessed a project, involving an immediate cash outflow followed by a series of cash inflows over the next seven years, by deducing the NPV and the IRR. You have now discovered that you...

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  You have just assessed a project, involving an immediate cash outflow followed by a series of cash inflows over the next seven years, by deducing the NPV and the IRR.

  
  


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  You have now discovered that you have underestimated the discount rate. Correcting for the underestimation will have the following effects, relative your original deductions:

  
  

                   NPV                  IRR

A               reduce            no change

B            no change         no change

C             increase             reduce

D             increase            increase