Which of the Following Statements Is CORRECT

question 105

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 cost of capital, 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 cost of capital, while the irr method assumes reinvestment at the irr.

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