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Hi John
Knowing that IRR is only an approximation to calucate NPV = 0.
However, what I calucate is few % difference with the suggested answer, is it normal?
(For Tisa June 12, my answer is 24-25%)Normally when I used IRR to check if my calucation is correct or not, my NPV is -500 to 500 but not 0.
I’m wondering is it normal and if I get full marks on my answer?
Thanks
Because it is only an approximation, different ‘guesses’ will give a different IRR.
It doesn’t matter. The difference will only be fairly small (if it is more than 1% different then probably you will have made a mistake). Otherwise you still get the full marks.
(If you need to, then my Paper F2 lectures on IRR will help you because I explain this there.)
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