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Dear John,
I have one problem that has been bothering me a lot lately.
How can I easily choose the two discount rates of return? Sometimes, I tried randomly and still turned out to be wrong. Is there any tip so that I do not waste time in trying different rates multiple times.Many thanks.
I always choose 10% as my first guess and then either 5% or 15% as the second, depending on whether the NPV at 10% was positive or negative.
However, for Section C questions there is no need to make two guesses anyway. It is more sensible to use the IRR function in the spreadsheet that is provided 🙂
You mean that they give us the two rates already in Section C?
I am sorry I have never taken F9 exam, and therefore do not know the spreadsheet that you are mentioning.No. The spreadsheet has a function that will calculate the IRR without you having to make any guesses.
It is essential that you attempt the practice CBE exams on the ACCA website and that you make sure you know what functions are available and how to use them.
Links to all of the resources about this on the ACCA website are in the last chapter of our free lecture notes.
oh wow many thanks, I rewatched the lectures and understood what you meant. That function really reduces a lot of time in solving the questions.
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