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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › WACC (IRR FOR REDEEMABLE)
Hi john.i am confused about which discount factor rates should be selected for NPV (IRR calculation).is the general idea behind use lower rates from coupan rate?
For example if loan notes are 12% redeemable.cash flow should discounted on 5% and 10% for IRR (rates are lower than 12%) for WACC or individual cost of capital calculation.please correct me if I am wrong.
You cannot really use that as a rule, and any two guesses will get the marks.
However in Section C questions it is better to use the IRR function in the spreadsheet anyway because that will give an exact IRR without having to make two guesses.