Question: The net present value method assumes that future cash inflows are immediately reinvested at the required rate of return, while the internal rate of return

The net present value method assumes that future cash inflows are immediately reinvested at the required rate of return, while the internal rate of return method assumes that future cash inflows are immediately invested at the internal rate of return rate. Which assumption is better? Explain your answer.

Step by Step Solution

3.38 Rating (157 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The assumption that future cash inflows are immediately reinvested at the required rate of return as used in the net present value NPV method is gener... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Managerial Accounting Questions!