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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 actual IRR formula:
IRR=r1?+(NPV1? / (?NPV1 – NPV2) ) ??脳 (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%
@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 馃檪