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While calculating irr how to identify guess rates easily?


Satya  Shashank

Satya Shashank

CA Inter

13K+

12-Jun-20 18:08

30

Answers (4)

1- Look at PV factors given in question. 2- Find out average cashflow for the given period. Divide the total investment by average cashflow. You will get an approximate present value annuity factor. Take rate corresponding to that.


Suraj Lakhotia

Suraj Lakhotia

Admin

12-Jun-20 18:09

Satya Shashank

Thanks sir, but what if PV factors are not given question?

IRRs asked for problems in exams are usually in range of 8-15% for data where period is 4-5 years and sum of inflow ( without PV ) is 120-150% of outflow. Start with either 8% or 15% and you will be able to move in right direction in your next guess


Sriram Somayajula

Sriram Somayajula

Admin

13-Jun-20 07:18

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