What affect will an increase in the discount rate have on the pressnt value of project tht has an initial cash outflow followed by 5 years of cash inflows?

The present value of a project or cash flow is the current worth of money in future cash flows provided there is a specified rate of return. The project here has an initial cash outflow followed by 5 years of cash inflows.

The discount rate determines the value of money in the future cashflows. Discount Rate is inversely proportional to the present value of a project. So as the Discount rate is increased the present value will decrease. This implies that the money in future is less worthy than in today.

Discount rate determines the time-value of money. Increased discount rate implies the risk of decrease in the value of money in the future.

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