sir when calculating cost of redeemable debt we calculate IRR.. why we r calculating p.v at 10% first?? there is no mention of required rate of return in the question.Is it a guess???
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10y ago#1We always have to make two guesses when calculating the IRR, whether calculating the IRR for a project or calculating the cost of debt.
You can use any two guesses you want - I tend to use 10% first simply because it is in the middle of the rates given in the tables!
(I do explain this in the free lectures, and if you need then look at the relevant F2 lectures as well on investment appraisal, because IRR calculations are revision of F2)
thank u.
10y ago#3You are welcome :-)
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