The net present value method is considered to be a better method of evaluation than the internal rate of return method because the NPV method

Question

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The NPV method assumes that cash flows are reinvested at the firm's more conservative cost of capital, which is a more realistic assumption than the IRR method. In contrast, the IRR method assumes that cash flows are reinvested at the internal rate of return, which may not represent the true cost of capital for the firm. Therefore, the NPV method is considered to be a better evaluation method than the IRR method.

The Net Present Value Method Is Considered to Be a Better