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IRR

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › IRR

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • Author
    Posts
  • January 6, 2016 at 10:11 pm #293639
    hamzaukadia
    Participant
    • Topics: 13
    • Replies: 13
    • ☆

    Hi John,

    I just wanted to know if my IRR calculation is correct. (5 years)

    I have two NPVs at:

    8% = 56.8
    20% = 27.5

    Therefore

    12% = 29.3

    1% = 29.3/12 = 2.44
    IRR = 8 + (58.8/2.44) = 31.3%

    January 7, 2016 at 6:51 am #293652
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    Yes – your answer is correct.

    (Although as you will know from the lectures, any IRR calculated from two guesses will always only be approximate, because the relationship is not linear.)

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