NPV calculation does not assume that cash inflows from the project will be reinvested at the risk-free interest rate.
The Net Present Value (NPV) method calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time, using the required rate of return. This use of a required rate of return in discounting assumes that all the future cash inflows from the project will be able to be reinvested at the same required rate of return, which may not be the situation.
The Internal Rate of Return is the discount rate at which NPV is zero. NPV calculation does not assume that cash inflows from the project will be reinvested at the Internal Rate of Return.
The Accounting Rate of Return is a ratio of the amount of increased book income to the required investment. NPV calculation does not assume that cash inflows from the project will be reinvested at the Accounting Rate of Return.
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