cashflows
0 27000
1 13000
2 13000
3 14500
IRR 22.89%
1. fair value is netted with first payment as the payment is in advance. lower of fairvalue or MLP needs to be taken (IAS 17)
2. Bargain purchase price added at period 3 (end of year 3)
3. lessor implicit rate should be taken (IAS 17) unless impossible.
4. IRR calculated via excel. You can use trial and error method to calculate IRR by discounting the cash flows CF as to achieve zero NPV (characteristic of IRR)  read IAS 17 and Zuberi and other easily available literature.
Trial error e.g you discount the above CF at 20% resulting in +ve NPV then you increase your discount rate to 25% resulting in ve NPV.
Now use both NPVs and use interpolation method to find IRR. Another way is to graph NPV/IRR lines and the intersection of the two is IRR.
Amortisation schedule
opening p P I closing p
27,000.00 6,819.87 6,180.13 20,180.13
20,180.13 8,380.90 4,619.10 11,799.23
11,799.23 10,299.23 2,700.77 1,500.00
NB. ask some1 preparing for exam to help you exactly. hopefully u get the concept.
