Which Statement Is True

question 13

Multiple Choice

Which statement is true?

• A) The internal rate of return method assumes that cash re-invested in the course of the life of the project earns at the same rate as the project.
• B) The net present value method assumes that the re-investment rate is at the cost of capital.
• C) Both the internal rate of return and the net present value methods assume that the re-investment rate is at the cost of capital.
• D) A and B are both true.

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Definitions:

Services Provided

Work performed by one party for another without the supply of tangible goods. Examples include consulting, marketing, maintenance, and legal services.

Accounting Equation

The accounting equation is a fundamental principle of accounting representing the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).

Received Cash

Funds that are taken in by the company, often from transactions such as sales, loans, or investments.

Business Entity

An organization created by one or more individuals to engage in business activities, structured as corporations, partnerships, sole proprietorships, or other forms.