Which of the Following Statements Is Correct

question 5

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.

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Definitions:

Genus

A principal taxonomic category that ranks above species and below family, and is used in the classification of living and fossil organisms.

Respiratory Tract

The parts of the body involved in breathing, including the nose, throat, and lungs.

Terrestrial Vertebrate

An animal with a backbone that lives on land as opposed to living in water or air.

Essential Attributes

Fundamental qualities or features that are intrinsic and defining for a particular object or entity.