Use the following two statements to answer this question:
I.The NPV assumes that all cash flows are reinvested at the firm's cost of capital.
II.The IRR assumes that all cash flows are reinvested at the project's economic rate of return.

Question

Quizplus · Accepted Answer

Both statements are correct. The NPV method assumes reinvestment at the firm's cost of capital, while the IRR method assumes reinvestment at the project's internal rate of return.

Use the Following Two Statements to Answer This Question