Final answer:
The NPV of a project is positively related to the discount rate.
Step-by-step explanation:
The statement in the question, "A project with an initial cash outflow followed by a cash inflow has an NPV that is negatively related to the discount rate," is false. In fact, the NPV (Net Present Value) of a project is positively related to the discount rate.
The discount rate is used to calculate the present value of future cash flows, and a higher discount rate decreases the present value of future cash flows. As a result, a higher discount rate reduces the NPV of a project, making it less attractive.
For example, let's consider a project with an initial investment of $10,000 and an expected cash inflow of $12,000 in one year. If the discount rate is 5%, the present value of the cash inflow would be $11,428.57, resulting in a positive NPV of $1,428.57. However, if the discount rate is increased to 10%, the present value of the cash inflow would be $10,909.09, resulting in a lower NPV of $909.09.