Which of the Following Statements Is Correct

question 5

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.

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Definitions:

Proxy

A person authorized to act on behalf of another, especially in voting at a shareholders' meeting.

Board Meeting

A formal gathering of the board of directors of an organization, company, or corporation to discuss and decide on company policy and management issues.

Liable

Being legally responsible or obligated.

Sarbanes-Oxley Act

A U.S. federal law that aims to protect investors by making corporate disclosures more reliable and accurate, enhancing financial transparency and accountability.