The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the internal rate of return.

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The internal rate of return (IRR) method assumes that the project's cash flows are reinvested immediately at a rate of return equal to the IRR. This assumption is critical to the IRR method's accuracy in assessing a project's profitability.

The Internal Rate of Return Method Assumes That the Cash