- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
.
- Posts
Hello Sir,
Hope you are well!
Ques –
Year Option A
$
0 Capital outlay (10,200)
1 Net cash inflow 6,000
2 Net cash inflow 5,000
3 Net cash inflow 3,000
The company’s cost of capital is 16%.
Now for IRR I have taken 16 and 20% however still the NPV is coming Positive 610 and 5 respectively then how can I got beyond 20% as we do not have discounting table for it and in that case how do we calculate the IRR ?You can still use the same logic as normal just using 16% and 20% and I do show this in my free Paper MA lectures (and the answer would be a little bit more than 20%).
However, given that you will be sitting the computer based exam it makes more sense (if it is part of a Section C question) just to use the IRR function on the spreadsheet provided and this will give the IRR without needing to make two guesses.
- You must be logged in to reply to this topic.