Question 1 c (ii) isn't the sensitivity margin of discount rate = initial investment / annuity?
I am confused with the calculation
Ask the Tutor ACCA FM
December 2011
10y ago#1I have absolutely no idea where you got that idea from!
For the interest rate it is the % change in the existing cost of capital to end up with the IRR.
The interest rate is 11%, the IRR is 16%. Therefore it can change by 5 percentage points, which is 5/11 = 45% of the interest rate.
I do suggest that you watch the free lectures on sensitivity analysis.
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