What reinvestment rate assumptions are built into the NPV, IRR, and MIRR methods? Give an explanation for your answer.

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 10DQ: What is the role that the required rate of return plays in the NPV model? In the IRR model?
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What reinvestment rate assumptions are built into the NPV, IRR, and MIRR methods? Give an explanation for your answer.

 

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