Which of the Following Is the Difference Between the Net

Multiple Choice

Which of the following is the difference between the net present value (NPV) method and the internal rate of return (IRR) method of capital budgeting?

A) NPV assumes that each cash inflow received is reinvested at the required rate of return, whereas the IRR assumes that each cash inflow is reinvested at the computed IRR.
B) IRR is used for choosing among mutually exclusive projects, and NPV is not used for this purpose.
C) NPV considers the time value of money and IRR does not.
D) NPV measures profitability in relative terms, whereas IRR measures profitability in absolute terms.