Which of the Following Statements Is Correct

question 104

Multiple Choice

Which of the following statements is correct?

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

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Definitions:

Per Capita Income

The average income earned per person in a given area or country, calculated by dividing the total income of the area by its population.

World's Income

The total economic output or the aggregate income produced by all countries in the world over a specific time period.

High-Income

Refers to individuals, households, or countries that earn significantly above the average income level, often associated with greater disposable income and purchasing power.