Under the internal rate of return capital budgeting technique, it is assumed that cash flows are reinvested at the
A)company's cost of capital.
B)hurdle rate of return.
C)internal rate of return.
D)discount rate.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value of an investment equal to zero. The IRR assumes that cash flows generated by a project are reinvested at the same rate as the project's internal rate of return. Therefore, choice C is the correct answer. Choices A, B, and D are not correct because they do not accurately describe the assumptions made under the IRR technique.

Under the Internal Rate of Return Capital Budgeting Technique, It