In capital budgeting analyses, the net present value (NPV) method and the internal rate of return (IRR) method both assume that the reinvestment of the project's cash flows occurs at the same rate.
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. It is possible that the NPV method and the IRR method will both involve reinvestment of the project's cash flows at the same rate if the project's required rate of return is equal to its internal rate of return. See 9-3: Comparison of the NPV and IRR Methods
You might also like to view...
The United States has a high-context culture
Indicate whether the statement is true or false
Which of the following is a component of the marketing strategy step of building a marketing plan?
A) situation analysis B) SWOT analysis C) break-even analysis D) communications strategy E) marketing profitability strategy
______ leadership, such as the path-goal approach, is oriented toward getting goals accomplished in the here and now, as opposed to change for the future.
a. Transactional b. Charismatic c. Transformational d. Individualistic
Which financial statement reports an organization's financial position at a single point in time?
A. Income statement. B. Trial balance. C. Statement of retained earnings. D. Balance sheet. E. Cash flow statement.