IRR! Help Needed.
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deborah
Registered Posts: 1 New contributor 🐸
Please can anyone help? How do i calulate IRR?
:crying:
:crying:
0
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 IRR only appears in the AAT in unit 6
 The syllabus is clear, the exam will not ask you to calculate it
 Finding the precise IRR of an investment project is difficlt without a spreadsheet
 An approximation is asked for in CIMA and ACCA exams, this is found by interpolation
 First find the NPV of an investment project
 If this was a positive value, then increase the discount rate until you find anothe NPV which is negative
 You then know that the IRR is greater than the discount rate for the +ve NPV but less than the discount rate at the ve NPV
 Take the lower rate + (the +ve NPV divided by the difference between the 2 NPV values x the difference between the 2 rates.
So 10% + ((300/480) x 3%) = 11.875%Sandy
sandy@sandyhood.com
www.sandyhood.com0
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