The net present value (NPV) method implicitly assumes that the rate at which cash flows can be reinvested is the required rate of return, whereas the internal rate of return (IRR) method implies that the firm has the opportunity to reinvest at the project's IRR.
Answer the following statement true (T) or false (F)
True
The NPV method implicitly assumes that the rate at which cash flows can be reinvested is the firm's required rate of return, r, whereas the IRR method implies that the firm has the opportunity to reinvest at the project's IRR. See 9-3: Comparison of the NPV and IRR Methods
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