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Explain why, if two mutually exclusive projects are being compared, the short-term project might have the higher ranking under NPV criterion if the cost of capital is high, but the long-term project might be deemed better if the cost of capital is low. Would changes in the cost of capital ever cause a change in the IRR ranking of two such projects?

In what sense is a reinvestment rate assumption embodied in the NPV, IRR, and MIRR methods?What is the assumed reinvestment rate of each method?

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Category:- Basic Finance
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