Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Answer on Pg 131? I.R.R Calculation seems wrong? or is it so? ;)

- This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.

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- January 30, 2017 at 2:39 am #370205
Hi John

I just came across the F2 Lecture Notes, and I am in page 131 ( Chapeter 23) and it has come to my attention of the way, you or maybe someone who has set the answer to be totally different from what i have learnt previously…

It asks us to calculate the I.R.R Value hence shouldn’t the calculations be

0.1 + 6660 * 4500 times 0.05 ? as the I.R.R Formula given was completely different from what i have seen on the answer booklet?

Please do clarify this Mr John

And btw thank you for all your help and publications…

sincerely

AlexJanuary 30, 2017 at 8:38 am #370240The answer on page 131 is completely correct.

There is no formula for the IRR given in the exam. By all means learn a formula if you want (although there is absolutely no need to) but the formula will give exactly the same answer.

If you watch the lecture on this chapter then you will see how it is calculated, and why.

(And you should have realised that the answer you would have come to could not possibly be correct. Since the NPV is positive at 10% and negative at 15%, then the IRR must be between 10% and 15%!!!!)There is no point in using the notes without watching the lectures. It is in the lectures that I work through the examples and explain and expand on the notes – they are simply lecture notes.

The lectures are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.January 30, 2017 at 11:13 am #370261Hi John,

First and foremost, thanks a lot for the quick reply. Yes, I had my head reexamined, lol and the answer is correct. No, with the amount of formula given and now i am doing F5 together with F2 which is a terrible two headache lol, i think i shall pass.

Thank You so very much for all the help. Ditto on that. I will watch the lecture notes and the tutorials as well…

Thanks.

Alex

January 30, 2017 at 5:49 pm #370289You are welcome 🙂

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