IRR
Suresh Pai S (Tax Consultant) (1029 Points)
03 April 2017
What is the basis for selecting two discounting rates for finding IRR?
Suresh Pai S
(Tax Consultant)
(1029 Points)
Replied 04 April 2017
Suresh Pai S
(Tax Consultant)
(1029 Points)
Replied 04 April 2017
ACMA M.Abdul Khaliq
(CMA)
(214 Points)
Replied 04 April 2017
At IRR project will break even
let us say suppose u discount at certain rate and find out some NPV +ve or -ve
try to to do trail and error process u will find upper and lower rates for discounting then fit in the formula to to find IRR
ACMA M.Abdul Khaliq
(CMA)
(214 Points)
Replied 04 April 2017
let us say example at 12% u get 1000 NPV its positive
try to increase rate now try 16% u may get -500 NPV
If this is the case ur IRR lies within 12 - 16%
shilpi
(student)
(780 Points)
Replied 05 April 2017
IRR by interpolation for short life projects(projects having life less than twice the payback period )and generating equal cash inflows.Step-1)cal.payback period 2)Find out PVAF within which the above payback lies.3)then we find two discount rate corresponding the above PVAF(one PVAF must be less than payback period and other one must be greater than payback period
shilpi
(student)
(780 Points)
Replied 05 April 2017
And in case of projects generating unequal cash inflows
1)we calculate fake back period 2)find out two discount rate within which above fake payback period lies from annuity table 3)calculate NPV at both rate to have one negative NPV and one positive NPV.(trial and error approach)
Analysis of 20 GST Notices (including 2 Appeals) and Practise on Drafting(with recording)
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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