When interpolating two calculated values of IRR, which of the options will give the most accurate result?
A) Reduce the vertical scale of the chart
B) Expand the vertical scale of the chart
C) Minimise the gap between discount rates
D) Maximise the gap between discount rates

Question

Quizplus · Accepted Answer

By minimizing the gap between discount rates, we have a more precise estimation of the IRR as we are making smaller increments between the two points being interpolated. Reducing or expanding the vertical scale of the chart won't affect the accuracy of the interpolation.

When Interpolating Two Calculated Values of IRR, Which of the Options