Classlist Content Assignments Quizzes Discussions Grades Att

Classlist Content Assignments Quizzes Discussions Grades Attendance More Chapter 11 Est. Length: 2:00:00 Nina Thornhill Attempt 1 Save Question 4 (1 point) D Which of the following statements is CORRECT? The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR The NPV method assumes that cash flows will be reinvested at the risk-free rate while the IRR method assumes reinvestment at the IRR The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate. The NPV method does not consider all relevant cash fows, particularly cash fows beyond the payback period The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period Save

Solution

Option one is correct

The NPV method assumes that cash flows will be reinvested at the WACC while the IRR method assumes reinvestment at the IRR

Because NPV assumes cash flows will be reinvested at the WACC and IRR assumes cash flows will be reinvested in the IRR