IRR

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Coming to the end of unit 6 ready for the exam, and am unclear as to the how IRR is calculated/explained . I notice this has come up in the past papers, often asking for an explanation.

My BPP home study book has a brief paragraph about it, with no examples.

Any help would be great.

Thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:IRR

    We just recently covered IRR in class. The advice our tutor gave us is that as long as you mention, if asked for an explanation, the key words that it is the point the investment BREAKS EVEN then that will get you at mark.

    The following paragraph is from the osborne book for unit 6 it may also help you.
    " The IRR is the rate of cost of capital at which the present value of the cash inflows exactly balances the initial investment. In other words, it shows the cost of capital, or rate of return, percentage at which the investment breks even, ie income equals expenditure, but still applying discounted cash flow principles."

    Hope this helps :)

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