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Is there a quick way to understand what discount rates you have to use when estimating the IRR?
For example, when using IRR to calculate the cost of debt, how am I supposed to know what discount rates to use? Aside from the obvious trial and error. Cos I feel that would waste a lot of my time during the exam.
As I explain in my free lectures, you can use any two ‘guesses’ (and I also explain how I decide on my guesses).
Obviously if it is a question in Section C then you can use the IRR function in the spreadsheet provided, which makes it very quick indeed.
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