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CIMA BA2 Internal Rate of Return
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The actual IRR formula:
IRR=r1+(NPV1 / (NPV1 – NPV2) ) x (r2 – r1)
r1 = the discount rate that less profitable
r2 = the discoutn rate that more profitable
NPV1 = more profitable figure
NPV2 = less profitable figure
The correct IRR for section internal return rate example 2 should be 12.15%
The lecture is correct – do watch it again (and do not simply learn formulae – the exam is concerned with testing your understanding)
Hello Mr. Moffat,
First of all, thank you very much for your teaching — it has been extremely helpful.
When watching the video, I wasn’t able to understand why the calculation uses the fraction 6660/8820,
so I tried using an AI tool to look for the equation and help explain the logic behind it.
I’m very sorry if my previous message came across as impolite — that was not my intention.
However, I’m still unable to fully understand the reason for using the fraction 6660/8820 just from the text alone.
Even so, I have gained a lot of practical concepts and insights from the video materials,
and I truly appreciate the work you and your team have put into this.
@opentuition
NPV value at 15% is -2160 not -8820? is this an error or am I mis understanding?
The -8820 is the change between the NPV @10% (6660) and the NPV @15% (-2160).
The lecture is very easy to understand. Thank you OpenTuition. I would like, if there are some more examples similar to OTQs with the different angles of the theory.
I don’t know what you mean by ‘different angles of the theory’ in relation to the IRR 🙂