Question

Which underlying assumption regarding cash flow reinvestment causes the potential ranking conflict between NPV and IRR methods for mutually exclusive projects?

A NPV assumes reinvestment at the cost of capital, while IRR assumes reinvestment at the internal rate of return.
B NPV assumes reinvestment at the risk-free rate, while IRR assumes reinvestment at the cost of capital.
C Both methods assume cash flows are reinvested at the bank lending rate.
D IRR assumes cash flows are not reinvested at all.
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