The internal rate of return method assumes that future cash flows can be reinvested to earn the same return generated by a capital investment project.

Name: The internal rate of return method assumes that future cash flows can be reinvested to earn the same return generated by a capital investment project.
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The internal rate of return (IRR) method indeed assumes that the project's cash flows can be reinvested at the project's own IRR, which may not always be realistic in practice.

The Internal Rate of Return Method Assumes That Future Cash