The internal rate of return method assumes that a project's cash flows are reinvested at the computed internal rate of return.
The internal rate of return is a rate of return on an investment, it is calculated by trial and error. The internal rate of return of an investment is the interest rate where the sum of discounted cash flow is equal to the investment.
The internal rate of return method assumes that a project's cash flows are reinvested at the computed internal rate of return. This method is a great way to evaluate and compare the returns of different investments.
Hence, the method of internal rate of return assumes that a project's cash flows are reinvested at the computed internal rate of return.
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