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:

Thrust Fault

A type of fault, or break in the Earth's crust, where older rocks are pushed above younger rocks due to compressional forces.

Monocline

A geological fold in which all strata are inclined in the same direction, creating a step-like feature in the landscape.

Anticline

A type of fold in rock layers that arches upwards, with the oldest layers at the core of the fold.

Horsts And Grabens

Geological structures formed by the movement of the Earth's crust, where a "horst" is an elevated block surrounded by faults and a "graben" is a depressed block bordered by faults.