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PAST PAPER JUNE 2009 Q5 REQUIRED (A)

This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.

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April 28, 2013 at 2:04 am #123696
wendyxu0730
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In past paper June 2009 Q5 required (a), when calculating IRR, the answer said that IRR cannot be calculated on proportions of projects and it must be calculated on the NPV of full projects.
Can somebody tell me why?
April 28, 2013 at 8:37 am #123757
John Moffat
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Arithmetically it can be calculated, but what the examiner means is that we could not really use the IRR’s because it is not valid to compare an IRR of (say) 20% with an IRR of (say) 25% if the 25% was only on a small amount.
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