How to choose Lower rate and Higher Rate for IRR

This topic has 2 replies, 3 voices, and was last updated 10 years ago by Elnur.

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June 1, 2015 at 5:31 pm #251478
darlene82328
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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
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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
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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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