I do not have practice material for IRR – that was an offer to students who were actually on the course at the time.

You presumably have a Revision/Exam Kit from one of the ACCA approved publishers (if you do not then you should buy one immediately because it is vital to get lots of practice on exam standard questions). Your Revision Kit will have plenty of questions calculating IRR for you to practice.

In addition, since IRR itself is only revision of what was examined in Paper F2, you will find more examples in the Paper F2 lecture notes and free lectures.

In example 5 on annuity… when we get the answer 80440 as u did in the video, do we not have to discount it further to get a present value in year 0..?
its like we calculated the value in year 4 but year 0 (now) we didn’t..

The first receipt is at time 4, and because there are 10 receipts, the last receipt is at time 13.

You can get the answer in one of two ways – it doesn’t matter which, so whichever you find more obvious.

One way is the take the annuity factor for 13 years (which would give a PV for all 13 years) and subtract the annuity factor for 3 years. That leaves you with a factor for time 4 to time 13.

The alternative is to take the annuity factor for 10 years (because there are 10 years of flows), and then discount by the ordinary present value factor for 3 years (because the annuity starts 3 years at time 4 instead of time 1).

Both ways give the same answer (they will be a little different because of the roundings in the tables, but that is irrelevant in the exam).

(If you are still unsure it will help you to watch the relevant F2 lectures because it is revision of F2)

First, there is no such thing as an ‘advanced perpetuity’! I can only guess that you mean a perpetuity that starts later than at time 1 – but that is still a perpetuity by definition!!

Second, it is extremely rare for perpetuities to occur investment appraisal questions at Paper F9 (they are relevant when calculating cost of equity, but that is dealt with in the lectures on the cost of equity). You will find it difficult (if not impossible) to find any past exam questions in the past five years that have a perpetuity existing in an investment appraisal question. We are teaching to pass the exam, not simply play around with numbers.

Thirdly, dealing with annuities (which do occur often in F9) and perpetuities (which don’t) are both pure revision from Paper F2, so if you have forgotten how to deal with them then you should watch the relevant F2 lectures.

In this Annuity Lecture , why you have removed the 1-3 years although we know that the first Receivable would be in Year 4 and last would be in Year 13 so I am little confused that why the 1-3 years are removed .

Hi Hailu, the video works for me. The problem could be the internet browser you are using. You may consider a different internet browser (firefox, google chrome, operamini, etc)

The standard of your teaching is simply OUT OF THIS WORLD!! You take so much care in highlighting the crucial points and normal Pitfalls, for students. I cannot thank you enough. My God bless you for your beautiful contribution.

Arun says

Hi John,

You mention in the lecture that you can provide practice material for IRR. I’d certainly like to have that if it’s not a problem.

Thanks.

John Moffat says

I do not have practice material for IRR – that was an offer to students who were actually on the course at the time.

You presumably have a Revision/Exam Kit from one of the ACCA approved publishers (if you do not then you should buy one immediately because it is vital to get lots of practice on exam standard questions). Your Revision Kit will have plenty of questions calculating IRR for you to practice.

In addition, since IRR itself is only revision of what was examined in Paper F2, you will find more examples in the Paper F2 lecture notes and free lectures.

Satiam says

In example 5 on annuity… when we get the answer 80440 as u did in the video, do we not have to discount it further to get a present value in year 0..?

its like we calculated the value in year 4 but year 0 (now) we didn’t..

John Moffat says

The first receipt is at time 4, and because there are 10 receipts, the last receipt is at time 13.

You can get the answer in one of two ways – it doesn’t matter which, so whichever you find more obvious.

One way is the take the annuity factor for 13 years (which would give a PV for all 13 years) and subtract the annuity factor for 3 years. That leaves you with a factor for time 4 to time 13.

The alternative is to take the annuity factor for 10 years (because there are 10 years of flows), and then discount by the ordinary present value factor for 3 years (because the annuity starts 3 years at time 4 instead of time 1).

Both ways give the same answer (they will be a little different because of the roundings in the tables, but that is irrelevant in the exam).

(If you are still unsure it will help you to watch the relevant F2 lectures because it is revision of F2)

mehreen245 says

why have you not discussed advanced perpetuities

John Moffat says

First, there is no such thing as an ‘advanced perpetuity’! I can only guess that you mean a perpetuity that starts later than at time 1 – but that is still a perpetuity by definition!!

Second, it is extremely rare for perpetuities to occur investment appraisal questions at Paper F9 (they are relevant when calculating cost of equity, but that is dealt with in the lectures on the cost of equity). You will find it difficult (if not impossible) to find any past exam questions in the past five years that have a perpetuity existing in an investment appraisal question. We are teaching to pass the exam, not simply play around with numbers.

Thirdly, dealing with annuities (which do occur often in F9) and perpetuities (which don’t) are both pure revision from Paper F2, so if you have forgotten how to deal with them then you should watch the relevant F2 lectures.

Ahmad Masood Faqiri says

Dear John Sir,

In this Annuity Lecture , why you have removed the 1-3 years although we know that the first Receivable would be in Year 4 and last would be in Year 13 so I am little confused that why the 1-3 years are removed .

John Moffat says

The 13 year annuity factor is the total of the discount factor from years 1 to 13 inclusive.

We want the total factor for years 4 to 13, so we need to remove the total for years 1 to 3, i.e. the 3 year annuity factor.

aliimranacca007 says

But 1st 4 years plus next 10 year become total 14 how 13 ? i am confused plz tell me 🙁

John Moffat says

The first receipt is in 4 years time – time 4.

The second receipt is at time 5

The third receipt is at time 6.

If you carry on (and use your fingers to count!) then if there are 10 receipts the last receipt is at time 13.

Musa says

Thanks. It worked. I downloaded Google Chrome.

Musa says

Hi, did anyone got this video to work?

Musa

John Moffat says

The lecture is working fine. Have you checked the technical support page? The link to it is above.

opiod says

Hi Hailu, the video works for me. The problem could be the internet browser you are using. You may consider a different internet browser (firefox, google chrome, operamini, etc)

Thanks.

henahailu2 says

Dear Opentuition team,

the video is not being seen in my computer.

please help

please.

Regards

Henok Hailu

ACCA Student

John Moffat says

Have you looked at the technical support page? The link to it is above.

reeb1350 says

Dear John,

You really make the problems look easy. All credit to you. Your explanations are very concise and to the point. Thank you so much.

vijay says

Dear Mr Moffat

The standard of your teaching is simply OUT OF THIS WORLD!! You take so much care in highlighting the crucial points and normal Pitfalls, for students. I cannot thank you enough. My God bless you for your beautiful contribution.

Many thanks

Vijay

John Moffat says

Thank you 🙂