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IRR – in practice

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › IRR – in practice

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
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  • December 27, 2022 at 1:58 pm #675134
    jamescooke
    Participant
    • Topics: 2
    • Replies: 0
    • ☆

    Perhaps a silly question – if you were finding the IRR in practice/doing a sensitivity analysis on interest rate change etc
    would you ever find people using the binomial expansion and finding the solution algebraically? Or would it just be a numerical solution that is left to the computer – I imagine Excel etc has something that might be more precise than the 2 interest rates and approximate method (though appreciate that in practice there might be limited benefit to greater precision given all the other uncertainties in forecasting assumptions etc)

    Best,
    James

    December 27, 2022 at 2:37 pm #675137
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    You would use the excel function in practice (just as you sensibly would in the exam) simply for the ease and speed 🙂

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