Which of the Following Statements Is Correct

question 104

Multiple Choice

Which of the following statements is correct?

• A) The NPV method assumes that cash flows will be reinvested at the required rate of return 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 required rate of return while the IRR method assumes reinvestment at the risk-free rate.
• D) The NPV method does not consider the inflation premium.
• E) The IRR method does not consider all relevant cash flows,and particularly cash flows beyond the payback period.

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Definitions:

Pope

The bishop of Rome and the spiritual leader of the worldwide Catholic Church, regarded as the successor to Saint Peter, one of the apostles of Jesus.

Charles II

King of England, Scotland, and Ireland from 1660 to 1685, known for his role in the Restoration of the monarchy after the Interregnum period.

English Civil War

A series of armed conflicts and political machinations between Parliamentarians ("Roundheads") and Royalists ("Cavaliers") in England from 1642 to 1651.

Puritan Colonies

Settlements established in North America by Puritans, who sought religious freedom and aimed to create a society based on their theological beliefs.