The internal rate of return method assumes that a project's cash flows are reinvested at the:
A) internal rate of return.
B) simple rate of return.
C) required rate of return.
D) payback rate of return.

Question

Quizplus · Accepted Answer

The internal rate of return method assumes that a project's cash flows are reinvested at the internal rate of return, which is the discount rate that results in a net present value of zero for the project. This method is useful for determining the profitability of a project and comparing it with other investment opportunities.

The Internal Rate of Return Method Assumes That a Project's