• Profile photo of John Moffat says

      I assume that you mean the 10% that I used as part of my calculation of the IRR to get the cost of debt.

      When calculating the IRR you make two guesses. I chose 10% as one of the guesses but any two rates will do. Using different guesses does give slightly different answers (because the relationship is not linear) but still gets full marks in the exam.

      I do suggest that you watch the earlier lectures on investment appraisal where the IRR calculation is explained in detail.

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