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Tisa (6/12)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Tisa (6/12)

  • This topic has 2 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • April 8, 2015 at 12:42 pm #240509
    BrianH
    Member
    • Topics: 44
    • Replies: 40
    • ☆☆

    Hi sir

    Bpp solution for part b, MIRR calc….
    Is it ok to use the IRR of 28% as the discount factor to calc the PVs for the cash flows?

    Eg PV yr 2 = 1,153/1.28^2 = 704

    Thanks

    April 8, 2015 at 1:12 pm #240511
    BrianH
    Member
    • Topics: 44
    • Replies: 40
    • ☆☆

    BPP used the WACC as the discount factor

    April 9, 2015 at 4:29 am #240591
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54704
    • ☆☆☆☆☆

    No – it is not OK to use the IRR.

    The whole point of MIRR is to use the WACC – MIRR assumes reinvestment is at WACC whereas the conventional IRR assumes reinvestment is at the IRR.

    (The free lecture on this may help you)

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