Which of the following statements is correct about the use of the net present value (NPV) method and the internal rate of return (IRR) method for capital budgeting decisions??
A. ?The NPV method assumes that cash flows will be reinvested at the required rate of return while the IRR method assumes reinvestment opportunity at the IRR.
B. ?The NPV method assumes that cash flows will be reinvested at the risk-free rate while the IRR method assumes reinvestment at the required rate of return.
C. ?The NPV method assumes that cash flows will be reinvested at the required rate of return while the IRR method assumes reinvestment at the risk-free rate.
D. ?The NPV method assumes that cash flows are not influenced by the inflation rate while the IRR method uses a rate of return after inflation adjustment.
E. ?The NPV method assumes that the project generates no cash flows beyond the payback period while the IRR method assumes no cash flow in the first year of the life of a project.
Answer: A
You might also like to view...
Situational pressure includes personal or job related stresses that could coerce an individual to act dishonestly
Indicate whether the statement is true or false
Which of the following is not one of the functions of reward and incentive systems?
A. They focus efforts on high-priority tasks. B. They motivate high levels of individual and collective task performance. C. They represent an effective control mechanism. D. They represent a poor means of influencing an organization's culture.
What does a global marketplace mean to an enterprise, in terms of marketing, distribution, and staffing?
What will be an ideal response?
A broadcast recipient address means that all devices connected to the LAN are to receive the message.
Indicate whether the statement is true or false