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Hello Sir,
IRR seems to change with the lower and upper discount rates changes. For an example IRR calculated with 5% & 20% would give an higher IRR whereas IRR calculated with 10% & 15% would give a lower IRR.
What causes this?
Will the answer be regarded incorrect if a wider range DF/AF was used to calculate IRR?
Thank you very Much!
I do explain this in my free lectures!
Apportioning between two interest rates only gives an approximate answer for the IRR because it assume that the relationship is linear, which it is not. So different guesses give slightly different answers, but still get full marks.
However, now that the exam is computer based, it is more sensible to use the IRR function available in the spreadsheet provided.
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