- This topic has 1 reply, 2 voices, and was last updated 5 years ago by
.
- Posts
Hello Sir. I was watching your ACCA F9 The cost of capital – cost of debt lecture. I’m a bit confused about how did you get the two discount factors when calculating Kd of investors and cost to the company? In the first part for the calculation of Kd of investors you used DF 10%& 15% and then for the cost to the company you used DF 10%&5%. Thank you in advance. Your lectures are very helpful.
Just as when we calculate the IRR for a project, we make any two ‘guesses’ and then approximate between them.
Using different guesses will give slightly different answers (because the relationship is not linear) but that is irrelevant for the exam because any answer is only ever approximate anyway.If you are unsure about IRR calculations then do watch the relevant Paper MA lectures, because this is revision from Paper MA.
- You must be logged in to reply to this topic.