The net present value method assumes that the cash inflows from a project are immediately reinvested at the

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The net present value method assumes that the cash inflows from a project are immediately reinvested at the required rate of return, which is the minimum rate of return necessary to attract investors to the project. This is a more realistic assumption than assuming that the cash inflows are immediately reinvested at an internal rate of return, accounting rate of return, or market rate of return, as these rates may not reflect the actual cost of capital or alternative investment opportunities available to the firm.

The Net Present Value Method Assumes That the Cash Inflows