An assumption implicit in the net present value technique is that all cash flows are reinvested at the cost of capital.

Question

Quizplus · Accepted Answer

The net present value technique assumes that all cash flows will be reinvested at the cost of capital, which is used as the discount rate to calculate the present value of future cash flows. This assumption allows for the comparison of different investment options based on their potential to generate returns that exceed the cost of capital.

An Assumption Implicit in the Net Present Value Technique Is