- This topic has 3 replies, 2 voices, and was last updated 3 months ago by John Moffat.
- You must be logged in to reply to this topic.
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.
Thank you, John.
Didn’t know the spreadsheet had an IRR function built into it.
Yes it does. Read the last chapter in our free lectures notes and follow the links from there to all of the resources on the ACCA website regarding the computer based exams.