Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) The NPV method assumes that cash flows will be reinvested at the WACC,while the IRR method assumes reinvestment 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 IRR.
• C) The NPV method assumes that cash flows will be reinvested at the WACC,while the IRR method assumes reinvestment at the risk-free rate.
• D) The NPV method does not consider all relevant cash flows,particularly cash flows beyond the payback period.
• E) The IRR method does not consider all relevant cash flows,particularly cash flows beyond the payback period.

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Definitions:

Field Study

A research investigation carried out in a naturally occurring setting.

Real-World Setting

A real-world setting refers to actual, not theoretical or simulated, environments and situations where events take place or data is collected.

Independent Variable

The variable that researchers manipulate in an experiment.

Dependent Variable

The variable that researchers measure in an experiment and expect to change as a result of the experimental manipulation.