Which of the following statements regarding capital budgeting analysis is not most correct? NPV assumes reinvest...
Which of the following statements regarding capital budgeting analysis is not most correct?
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NPV assumes reinvest at the opportunity cost of capital. |
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IRR assumes reinvest at IRR. |
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Reinvest at opportunity cost, r, is more realistic, so NPV method is best. |
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None of the above statements is correct. |
TIA
Homework Answers
please find below the solution... let me know if you need any clarification ..
Correct answer is option ; None of the above statements is correct.
all the statements are correct.. so not correct statement is None of the above statements is correct.
NPV is based on WACC or weighted avergae cost of capital or opportunity cost. IRR assume that cash flows are reinvested at irr rate. reinvestement rate assumed in nPV is better compared to IRR . therefore all statements are correct.
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