When using the NPV model,it is assumed that we can borrow or lend money at the same interest rate.

Question

Quizplus · Accepted Answer

The NPV model assumes that the discount rate used to calculate the present value of expected cash flows is the same as the interest rate that can be borrowed or invested at. This makes sense since the opportunity cost of investing in a project is the return that could have been earned by investing the same amount of money elsewhere. Therefore, it is assumed that the borrowing and lending rates are the same.

When Using the NPV Model,it Is Assumed That We Can