In using the internal rate of return method, it is assumed that cash flows can be reinvested at

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discounting rate that makes the net present value of all cash inflows equal to the net present value of all cash outflows. In other words, it calculates the return an investment is expected to generate. The assumption that cash flows can be reinvested at the IRR is consistent with the method and is what the IRR represents. Therefore, the answer is C.

In Using the Internal Rate of Return Method, It Is