The reinvestment rate assumed in the net present value and internal rate of return calculations, respectively are:

Question

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In the net present value (NPV) calculation, the reinvestment rate assumption is the project's cost of capital, as it discounts future cash flows at this rate. In the internal rate of return (IRR) calculation, the reinvestment rate assumption is the IRR itself, as it is the rate at which the net present value equals zero.

The Reinvestment Rate Assumed in the Net Present Value and Internal