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Hi, when calculating the cost of redeemable debt how do I know which estimate percentages to use? Thanks
As always when calculating the IRR (whether to get the cost of debt or to calculate the IRR of a project) then you can use any two rates. The IRR will end up being slightly different depending which rates you use (because the relationship is not linear) but this is irrelevant in the exam. I do explain this in my free lectures – the lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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