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?
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.
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.
mboyadzhieva says
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?
Thank you
annette says
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
You are correct – I do apologise. I have been meaning to correct the lecture but I keep forgetting 馃檨
Thanks for reminding me 馃檪
accastudentofoman says
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.
accastudentofoman says
My apologies. The error IS rectified in a separate lecture: https://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.
John Moffat says
Thanks 馃檪