Which Statement Is True

question 21

Multiple Choice

Which statement is true?

• A)The Internal Rate of Return method assumes that cash reinvested in the course of the life of the project earns at the same rate as the project.
• B)The Net Present Value method assumes that the reinvestment rate is at the cost of capital.
• C)Both the Internal Rate of Return and the Net Present Value methods assume that the reinvestment rate is at the cost of capital.
• D)Both A and B.

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Definitions:

Negotiability

The characteristic of a document, such as a check or bill of exchange, that allows it to be transferred or endorsed from one party to another in legal transactions.

Other Agreements

Pertains to additional contracts or understandings between parties that are separate from the main agreement.

Recital

In legal terms, a recital refers to a narrative or introductory part of a legal document that outlines the background information or context.

Non-negotiable

A term describing an instrument or agreement that cannot be transferred or altered by endorsement or negotiation.