Which of the following is true regarding NPV?
A.
NPV assumes reinvestment at the cost of capital.
B.
NPV assumes reinvestment at the prevailing rate.
C.
NPV assumes reinvestment at the NPV rate.
D.
NPV decisions should be made based on the highest value for all the selections.
Explanation:
A is the correct answer. Net present value (NPV) assumes reinvestment is made at the cost of capital.