Which of the Following Statements Is CORRECT

question 1

Multiple Choice

Which of the following statements is CORRECT?

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

---

Definitions:

Variant of authority decisions

Different forms or approaches to making decisions based on established power or authority within an organization.

Vroom, Yetton, and Jago

A model of decision-making that focuses on leadership and outlines how leaders can evaluate the situation and determine the level of involvement from subordinates in the decision-making process.

Manager sharing the problem

A leadership approach where managers involve their team in problem-solving processes to encourage ownership and diverse input.

Organizational Culture

is a system of shared beliefs, values, norms, and practices that influences how members of an organization interact with each other and with stakeholders outside the organization.