Generally, the ____ is considered to be a more realistic reinvestment rate than the ____.
A) risk-free rate; internal rate of return
B) internal rate of return; cost of capital
C) cost of capital; internal rate of return
D) risk-free rate; cost of capital

Question

Quizplus · Accepted Answer

The cost of capital is considered a more realistic reinvestment rate than the internal rate of return because it reflects the rate of return required by investors to invest in a project, taking into account the risk of the investment, whereas the internal rate of return assumes that all future cash flows can be reinvested at the project's own IRR, which may not be realistic.

Generally, the ____ Is Considered to Be a More Realistic