Question
S1:The NPV method's assumption that cash in ows are reinvested at the cost of capital is generally more reasonable than the IRR's assumption that cash
S1:\The NPV method's assumption that cash in ows are reinvested at the cost of capital is generally more reasonable than the IRR's assumption that cash ows are reinvested at the IRR. This is an important reason why the NPV method is generally preferred over the IRR method." S2:\For a project with one initial cash out ow followed by a series of positive cash in ows, the modied IRR (MIRR) method involves compounding the cash in ows out to the end of the project's life, summing those compounded cash ows to form a terminal value (TV), and then nding the discount rate that causes the PV of the TV to equal the project's cost." (a) S1 is False and S2 True (b) S1 is True and S2 False (c) Ambiguous statements. (d) S1 is True and S2 True (e) S1 is False and S2 False
NEED EXPLANATION TOO
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started