alleryStart learning →IRR is often said to assume interim cash is reinvested at:
Athe project's own IRR
Bthe firm's cost of capital
Cthe rate of inflation
Dthe current risk-free rate
Answer & Solution
Correct answer: A. the project's own IRR
The usual criticism is that IRR implicitly reinvests interim inflows at the same rate the project itself earns.
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