Answer:
The net present value of the project is not as sensitive to changes in the firm's required rate of return as the net present value of a project that generates large cash flows later in its life.
Explanation:
In capital budgeting, when a project generates its largest cashflows in the first few years of its life will have a net present value(NPV) that is not as sensitive to changes in the firm's required rate of return as the net present value of a project that generates large cash flows later in its life. Additionally, its Internal Rate of Return(IRR) and NPV value will be higher than that with larger later cash flows.
