The internal rate of return assumes that funds are reinvested at the

Question

Quizplus · Accepted Answer

The internal rate of return assumes that funds are reinvested at the yield on the investment, which is the rate of return that is earned on each dollar that is invested. This assumption makes sense because it reflects the actual return that the investor would receive if the funds were actually reinvested in a similar investment, rather than being held in cash. The other options (A, C, and D) do not reflect the actual return that would be earned on the investment, and therefore are not consistent with the assumptions of the internal rate of return.

The Internal Rate of Return Assumes That Funds Are Reinvested