corporate finance

Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

corporate finance

Postby chandniwadhwani92 » Fri Nov 21, 2014 6:49 pm

Q-1 Firm with limited access to additional liquidity often impose a maximum payback period then use a measure of profitability such as npv and irr to evaluate project that satisfy maximum payback period constraints
What does this sentence means? limited access to liquidity

Q-2 How projects with mo IRR are profitable projects?

Finance Junkie
Posts: 947
Joined: Wed Apr 09, 2014 6:28 am

corporate finance

Postby edupristine » Wed Nov 26, 2014 10:44 am

It means a limited ability to issue financing's in a sufficient and timely manner when necessary. Project with no IRR example:-
Year 1: $200,000

Year 2: -$600,000

Year 3: $500,000

It’s a profitable project - if your discount rate is 0% the NPV is $100,000; if your discount rate is 10% the NPV is $67,769 - but there is no IRR.

Return to “CFA Level I”



Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to and we will rectify it.