The Net Present Value Method Assumes That Cash Flows Are

question 61

Multiple Choice

The net present value method assumes that cash flows are reinvested at the ____, whereas the internal rate of return method assumes that cash flows are reinvested at the ____.

• A) discount rate; required rate of return
• B) cost of capital; market rate of return
• C) firm's cost of capital; computed internal rate of return
• D) marginal cost of capital; discount rate

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment; involves asking questions, analyzing arguments, and identifying biases.

Cynical

Having a belief that people are motivated purely by self-interest; skeptically distrustful of human sincerity or integrity.

Judgmental

Having or displaying an excessively critical point of view or being quick to make judgments about others.

Rubric

A set of guidelines or criteria used to evaluate or score performance, products, or responses in a consistent and standardized manner.