NPV assumes reinvestment of intermediate free cash flows at the cost of capital,while IRR assumes reinvestment of intermediate free cash flows at the IRR.

Question

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NPV (Net Present Value) assumes that intermediate cash flows are reinvested at the project's cost of capital, while IRR (Internal Rate of Return) assumes reinvestment at the IRR itself, which can lead to different project evaluations under each method.

NPV Assumes Reinvestment of Intermediate Free Cash Flows at the Cost