Which of the following investment decision rules (if any) assumes that the cash flows generated are reinvested over the life of the project at the firm's cost of capital?
A) payback period
B) internal rate of return
C) accounting rate of return
D) None of these are correct

Question

Quizplus · Accepted Answer

The assumption that cash flows generated are reinvested at the firm's cost of capital is not specifically associated with the payback period, internal rate of return, or accounting rate of return. These methods have different assumptions and do not explicitly assume reinvestment at the firm's cost of capital.

Which of the Following Investment Decision Rules (If Any) Assumes