Final answer:
The NPV of a project with an initial cash inflow followed by outflows will decrease as the discount rate increases because future cash flows are discounted at a higher rate, which reduces their present value and thus the overall NPV.
Step-by-step explanation:
When evaluating a project with an initial cash inflow followed by cash outflows, the Net Present Value (NPV) will decrease as the discount rate rises. This is because NPV is the sum of the present values of all cash flows associated with the project, both inflows and outflows, using a specific discount rate to adjust for the time value of money. A higher discount rate implies a lower present value for future cash outflows, leading to a decrease in the overall NPV of the project.