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Hello john, I just wanted to ask that when calculating cost of debt of Redeemable debt, we use two different interest rates. Suppose if our interest rates are different from two used in answer, our cost is like different in decimal places. Would we still get the full marks if we have got the right answer according to interest rates we used.
Yes – you will get full marks (assuming your arithmetic is correct 🙂 )
Different guesses will give a different IRR, (because it is not linear) but that is no problem.
I think you might have answered this in your lecture (I’ll watch again if I get a chance!), but if my second choice of DF results in two positive, or two negative NPV’S, should I still go ahead and work out the IRR based on my results, or choose a better DF? Thanks.
There is no need to make a third ‘guess’
You can still estimate the IRR in the normal way even if you have 2 positives or 2 negatives.
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