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in an APV question, part b) of the question asks us to calculate the MIRR.
the answer uses the Ke^i cost of equity instead of the geared Ke.
(both are known)how do we decide which rate to use?
thanks
You always use the WACC.
However I am guessing you are asking about a question Neptune. If you are, then part (b) specifically says to ignore the refinancing which is why they have used the ungeared cost of equity (which is what the WACC would be without any gearing).
u r right…..but i still dont get what that means..”ignore refinancing” .. i will reread again.. just watched ur lecture on mirr too… i will come back if i don get it…:)
thanks as usual
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