• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

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 3 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 31, 2022 at 1:39 pm #652418
    pinkyjovin123
    • Topics: 91
    • Replies: 134
    • ☆☆☆

    Hello sir

    Please help me with the below question .

    Using an interest rate of 10% per year the NPV of a project has been correctly calculated as $50.If the interest rate is increased by 1% the NPV of the project falls by $20

    What is the IRR ??

    Answer is 12.5%

    TIA

    March 31, 2022 at 2:39 pm #652426
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49601
    • ☆☆☆☆☆

    If the NPV at 10% is $50, then for the NPV to be zero it needs to fall by $50.

    As explained in the lectures, we assume that the relationship between the NPV and the rate if interest is linear, and therefore if a fall of $20 in the NPV is an increase in interest of 1%, then a fall of $50 in the NPV will be an increase in interest of 50/20 x 1% = 2.5%.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • ty0311 on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • Manuga on ACCA AB Chapter 18 – The nature of communication – Questions
  • Manuga on MA Chapter 17 Questions Budgeting
  • Manuga on Budgeting part 4 – Cash Budgets – ACCA Management Accounting (MA)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy