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i have seen other post that the way to get 4.2%is by
The NPV at 5% is 1043.27 – 1079.68 = -36.41
The NPV at 4% is 1089.01 – 1078.68 = +10.33
Therefore the IRR = 4% + 10.33/(10.33 + 36.41) = 4.02%
(Got from https://opentuition.com/topic/gnt-co/)
1. how did you get 1078.68 ? because this is not shown anywhere in the question or in the answer
2. also shouldn’t the IRR be 4.22% ?
4% + 10.33/ ( 10.33 + 36.41 ) x (5%-4%)
Oops – I made a trivial typing error (it happens when I am answering so many questions).
However – assuming you are happy with basic IRR calculations (which you should be since it was the same in Papers F2 and Paper PM) then my error should be pretty obvious 🙂
It should read as follows:
The NPV at 5% is 1043.27 – 1079.68 = -36.41
The NPV at 4% is 1089.01 – 1079.68 = +9.33
Therefore the IRR = 4% + 9.33/(9.33 + 36.41) = 4.2%
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