Which of the following statements is CORRECT?
A. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR.
B. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the risk-free rate.
C. The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period.
D. The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period.
E. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the IRR.
Answer: E
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