Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Cash

Money in the form of currency, including coins and banknotes, that is readily available for use.

Invoicing Error

A mistake in the billing process, often leading to disputes or discrepancies in financial accounts.

General Journal

The general journal is a comprehensive record of financial transactions over the life of a company, listed in chronological order.

Purchases Journal

An accounting record where all purchases of merchandise, inventory, and other supplies on credit are recorded, excluding cash purchases.