10 3 explain why the npv of a relatively long term

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(10-3) Explain why the NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future, is more sensitive to changes in the cost of capital than is the NPV of a short-term project. If an increase in the discount rate has a much greater impact on a cash flow in 5 years than in 1. According to the text, NPV obtains by discounting future cash flows and discounting process actually compounds the interest rate over time. (10-4) When two mutually exclusive projects are being compared, explain why the short-term project might be ranked higher under the NPV criterion if the cost of capital is high whereas the long-term project might be deemed better if the cost of capital is low. Would changes in the cost of capital ever cause a change in the IRR ranking of two such projects?
(10-5) Suppose a firm is considering two mutually exclusive projects. One has a life of 6 years and the other a life of 10 years. Would the failure to employ some type of replacement
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