The net present value method accurately assumes that project cash flows can only be reinvested at the company's required rate of return.

Question

Quizplus · Accepted Answer

The net present value method assumes that project cash flows can only be reinvested at the company's required rate of return, which is a key assumption of the method. This assumption ensures that the opportunity cost of investing in the project is reflected in the analysis.

The Net Present Value Method Accurately Assumes That Project Cash