Final answer:
The NPV of a project with an initial cash inflow followed by cash outflows decreases as the discount rate increases because the present value of future cash inflows is inversely related to the discount rate.
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 the present value of future cash flows is inversely related to the discount rate. As the discount rate increases, the present value of the cash inflows decreases. Therefore, if the future cash inflows remain unchanged and the discount rate increases from 8% to 11%, the present value of these inflows will be lower, leading to a reduced NPV.