Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Mpck revision OT
- This topic has 5 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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- August 29, 2016 at 8:22 pm #336097
Dear Tutor,
One of the questions from the Mock exam asks which is not a weaknesses of IRR. Can you please help me why the statement below is not a weakness:
It cannot reliably be used as a basis for choosing between investments.
Thank you
August 29, 2016 at 8:27 pm #336098It is a weakness, which is why it is not one of the correct answers!
August 29, 2016 at 8:39 pm #336101But the questions asks which is not a weakness, and this is one of the correct questions according to the answer (besides: There can be several IRR’s for the same investment).
August 30, 2016 at 7:04 am #336156Sorry – ignore my previous reply.
Although it is true that there can be several IRR’s and that it cannot reliably be used as a basis for choosing between investments, they are not weaknesses of the IRR itself – they are problems with how the IRR is used. There is a subtle difference in the wording.
August 30, 2016 at 7:57 am #336181Thank you very much for your help.
I think I’ll have to guess if such a question comes in the exam 🙂
August 30, 2016 at 7:59 am #336182It does annoy me when the examiner makes the wording the problem rather than the actual theory.
Hopefully he will not do something like that in your exam 🙂
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