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October 2, 2017 at 2:45 pm
Hello and many thanks for the great lectures!
Could you please explain why any two guesses would work for calculating the IRR? I guess that would be true if at least one gives NPV pretty close to zero or am I wrong?
June 22, 2015 at 5:04 pm
John….please ignore my query because the notes actually have the correct figures, I was following the lectures and practicing examples without checking the answers at the back.
Ps: The answer to example 10 has the same figures as I got so panic over – phew!
Apologies but you might want to check the lecture – The Cost of Capital (part 3), example 10.
Many thanks once again.
John Moffat says
June 22, 2015 at 5:19 pm
You are correct – I do apologise. I have been meaning to correct the lecture but I keep forgetting 🙁
Thanks for reminding me 🙂
December 8, 2016 at 1:01 pm
A gentle reminder to correct the mistake.
The annuity factor for 6 years at 5% Discount rate is 5.076 and not 4.917 which is annuity factor at 6%.
Thanks for teaching about the short cut to IRR formula. Instead of just blindly applying the quite ‘messy’ formula I really understand deeply how I arrive at the figures.
December 8, 2016 at 1:53 pm
My apologies. The error IS rectified in a separate lecture: http://opentuition.com/acca/p4/cost-of-capital-example-10/
Please ignore my comment on the error and accept my gratefulness for the logical way of finding IRR.
December 8, 2016 at 2:31 pm
June 22, 2015 at 4:53 pm
In lecture The Cost of Capital (part 3) – example 10, should the annuity for 5% would have been 5.076? In the lecture you have used 4.917 which is 6%, can you please review this?
Many thanks for the great lectures and sense of humour(::)!!.
February 17, 2015 at 12:06 pm
Hi thanks ive never come across such an elaborate lecturer.
January 26, 2015 at 4:09 pm
i dont get these gueses from 10% and 5% please explain
January 26, 2015 at 4:53 pm
Which bit don’t you get?
In order to calculate an IRR (whether it is for project appraisal or for calculating a cost of debt) we need to guess at two interest rates (any two guesses) and then approximate between them.
If you are not familiar with calculating an IRR, then the F2 and F9 lectures may help you.
January 28, 2015 at 9:06 am
so can i stick to 5% and 10% on guesses
January 28, 2015 at 9:08 am
Yes – no problem 🙂
July 20, 2014 at 4:01 pm
I am unable to view the video, despite deleting the cookies. I also loaded the latest Adobe Flash player.
However I was able to view the video on another PC.
July 20, 2014 at 6:10 pm
No idea why your pc fails to load lectures,, try another browser. Or contact your Internet provider?
April 18, 2014 at 2:17 am
Hi sir.This one is regarding MACAULAY DURATION . in bpp text it says when yield decreases duration increases but in an example i did(opentuition notes.ch8.Example4) lowering the yield has now effect on the duration.Why is that ?
April 17, 2014 at 8:18 pm
hi , I know this is a noob question at this level but why in example 10 when i use 10% and 15% to calculate IRR i get the different value in comparison to what you have used in the question. I recall this has something to do with using one possitive npv and one negative for IRR calculation.But please would u be kind enough to elaborate.Thanks
April 18, 2014 at 6:09 am
You can use any two guesses to calculate the IRR, but because the relationship is not linear then different guesses will give slightly different answers.
This is not a problem in the exam – you get full marks.
Ideally we would have one positive NPV and one negative, but even that is not essential .
February 6, 2014 at 10:56 am
Please help…..i keep on getting this message when i click play on the vedio “The page you tried to find does not exist, please choose below:”
February 6, 2014 at 12:21 pm
The video is working fine – it must be a problem at your end.
If you go to the support page you should find the solution for your device.
The link is: http://opentuition.com/support/
November 27, 2013 at 2:05 am
In example 10 the an annuity for 6% was incorrectly used that is 4.917. It should be at 5% for 6yrs at 5.076 as the disc rate for 5% in 6 yrs was used. This is where IRR was being calculated for cost of Debt to the company. I know the concept remains the same and was just an error but for future reference i thought i should just mentioned it… the IRR was actually 7.5% not much of a difference any ways
November 27, 2013 at 6:38 am
Thanks – I will check the lecture tonight (and the answer at the back of the course notes) and if it is wrong, then I will have it corrected. (I cannot check at the moment because I am away from home).
I do apologise if I have made a mistake.
November 27, 2013 at 12:10 pm
Your welcome… But mistakes happen sometimes. I only mentioned it so for future reference. However, when i looked at the last lecture on Cost of capital, that is the lecture on EXAMPLE 10 only. The correct rate was used there. But i must say your lecture help me understand the Cost of Capital so well. Thanks a mil. You are doing a great Job. Thanks again.
August 16, 2013 at 10:32 am
Thank you sir
April 17, 2013 at 6:23 pm
thank you sir John!
April 17, 2013 at 6:25 pm
I lik yor teachering styel
November 9, 2012 at 4:57 pm
Excellent lecture! Thank you
September 25, 2012 at 12:42 pm
I can’t play the videos on my iPad. Does anyone know why and how I can resolve this?
September 25, 2012 at 1:13 pm
lectures do play on the ipad. maybe your internet is behind a firewall. contact your internet provider for check this for you
August 22, 2012 at 3:55 pm
Its very useful to students, but videos are do not opened arising the some errors, please rectify
August 22, 2012 at 4:00 pm
@gellisk, videos play fine
Your PC or your internet connection is the problem
August 31, 2012 at 1:08 pm
@admin, am not able to view video lectures it reads server not found
August 31, 2012 at 1:27 pm
@lyford, you are behind a firewall, ask your internet provider for help
May 24, 2012 at 6:10 pm
April 4, 2012 at 3:32 pm
Another great work by John with a negligible error. Thanks a lot sir.
February 25, 2012 at 8:55 pm
Were these errors noted and accepted by OT, and if so was the video corrected?
April 4, 2012 at 5:13 pm
@walshan, what errors?
November 30, 2011 at 8:10 am
in the example of 9, he calculated the Ke by using the market value post dividend. is there anything wrong? the formula shows that the market value of shares in it should be ex div.
April 4, 2012 at 5:12 pm
@1708116acca, post dividend = ex div
September 18, 2011 at 4:20 pm
Good staff. The error noted on Annuity factor for 6years at 5%.
October 13, 2013 at 7:30 pm
yes, it is on example 10, but it only makes difference of 0.01% in the answer. I got 13.55% as WACC
September 9, 2011 at 1:37 am
yeap very good revision. a genuine mistake indeed.
July 21, 2011 at 2:02 am
the discount factor for the annuity at 6 years for 5% is 5.076.
in this answer where they they get 4.917?
August 26, 2011 at 3:18 pm
it’s just a genuine mistake. he took 6%, 6 years…
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