On a Purely Theoretical Basis, NPV Is a Better Approach

question 160

True/False

On a purely theoretical basis, NPV is a better approach to capital budgeting than IRR because NPV implicitly assumes that any intermediate cash inflows generated by an investment are reinvested at the firm's cost of capital.

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Definitions:

Warranty Of Merchantability

An implied guarantee that a product will meet reasonable standards of quality and performance.

Privity Of Contract

A doctrine in contract law which states that contracts are only binding on the parties signing the agreement and no third party can enforce the contract or be sued under it.

Strict Liability

A legal doctrine holding an individual or entity responsible for damages or harm caused without the need for proof of negligence or fault.

Modified

This term refers to something that has been changed or altered from its original form.