WACC (IRR FOR REDEEMABLE)

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August 9, 2021 at 1:48 am #630856
syedmushahid
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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.
August 9, 2021 at 6:36 am #630866
John Moffat
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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.
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