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Hi,
I was wondering, how am I suppose to know what discount factors to use to calculate IRR? Is it any random percentages or is there a method to calculate them?
Thank you
You use any two sensible interest rates (unless, obviously, the question specifies which rates to use). As I explain in my free lectures for Paper FM (and Paper MA because this is revision from Paper MA (was F2)), the answer is only ever approximate because the relationship is not linear.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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