The Net Present Value Method Is a More Conservative Technique

question 50

Multiple Choice

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method

• A) assumes that cash flows are reinvested at the project's internal rate of return.
• B) concentrates on the liquidity aspects of investment projects.
• C) assumes that cash flows are reinvested at the firm's weighted average cost of capital.
• D) none of these.