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ysusfkhan: Please do not answer questions in this forum – it is Ask the Tutor. (But please do help people in the other P4 forum 🙂 )
taj1991: yusufkhan’s answer is correct in that to calculate the return on the bonds, you need to calculate the IRR as normal (the examiner has used guesses of 4% and 5%, but any reasonable guesses would have done).
Good day Sir.
How do we actually decide if the guesses are reasonable?
Will it be acceptable if let say , i uses a % of 10% and 1 %?
Because if my calculations are right, my % will turned out to be 4.9-5% instead of the examiner’s 4.55%.
Will be gap between the % cause me to lose some marks?10% and 1% is fine, and using different guesses will end up with a different result.
I cannot tell if your calculations are correct, but your answer is near enough to the examiners answer to make it probable that they are correct.
Just make sure, obviously, that it is clear in your workings what guesses you are making, because as always the marks are for the workings rather than for the final answer.
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