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How to choose Lower rate and Higher Rate for IRR

Forums › ACCA Forums › ACCA FM Financial Management Forums › How to choose Lower rate and Higher Rate for IRR

Viewing 3 posts - 1 through 3 (of 3 total)
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  • June 1, 2015 at 5:31 pm #251478
    darlene82328
    Member
    • Topics: 3
    • Replies: 6
    • ☆

    Hi

    Does anyone know in question relating to WACC, when you calculate cost of debt, what determines the lower r and higher r you use?

    Thanks

    June 1, 2015 at 5:46 pm #251521
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54479
    • ☆☆☆☆☆

    Nothing determines it. Any two sensible guesses are OK (even though different guesses obviously give slightly different answers due to the fact that the relationship is not linear).

    You should watch the free lecture on this!

    June 1, 2015 at 8:37 pm #251667
    Elnur
    Member
    • Topics: 2
    • Replies: 7
    • ☆

    Calculate second NPV using a different rate
    If first NPV is positive, use second rate
    greater than first rate
    If first NPV is negative, use second rate
    less than first rate

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