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Which capital budgeting method applies the minimum required rate of return as the reinvestment rate for project cash flows? Select one: a

Finance Jan 19, 2021

Which capital budgeting method applies the minimum required rate of return as the reinvestment rate for project cash flows?

Select one:

a.

Simple payback period

b.

Net Present Value (NPV) of the project

c.

Internal Rate of Return (IRR) of the project

d.

None of above

Expert Solution

Simple payback does not apply any rate of return

NPV just finds the present value of the cash flows

IRR assumes the cash flows are reinvested at the Internal Rate of return, not at any other required rate of return

d. None of the above is the correct answer.

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