Question
Which of the following is FALSE? : The net present value method assumes that cash flows are reinvested at the computed internal rate of return,
Which of the following is FALSE? : The net present value method assumes that cash flows are reinvested at the computed internal rate of return, whereas the internal rate of return method assumes that cash flows are reinvested at the firms cost of capital. The payback period of an investment is defined as the length of time required for the cumulative cash flows from a project to equal the initial outlay. If a firm uses the same company cost of capital for evaluating all projects, the firm will likely reject good low-risk projects. If a firm uses the same company cost of capital for evaluating all projects, the firm will likely correctly accept projects with average risk.
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