Hi The internal rate of return of project B of question 5 states that 7% deriving through equation of value ( in Examiners report of 2012 April). I got different answer. Could any one help me please! Thanks!
The euation of value for project B is given as 1000 = 85 level annuity factor for 20 years payable quaterly in advance plus discounted for 20 years multiplied by 90 level annuiity for 5 years payable quarterly in advance. That gives the IRR is 7%. note: sorry for writing in words.
Hold on - had a look at the examiners report (instead of our ASET solutions) and see the issue. The 7% is not the solution it's their first guess based on them saying it's roughly 85 for 25 years paid annually.
Thanks Lee I got the answer. Summing up total payment as single and also using average payment period. Grateful to you!
