At what constant growth rate would the company just break even if it still required a return of 13 percent on its investment?
The Yurdone Corporation wants to set up a private cemetry business. According to the CFO Barry M. D Show more The Yurdone Corporation wants to set up a private cemetry business. According to the CFO Barry M. Deep business is looking up. As a result the cemetry project will provide a net cash inflow of 124000 for the firm during the first year and the cash flows are projected to grow at a rate of 5.7 percent per year forever. The project requires an initial investment of 1470000. 1.If Yurdone requires a return of 13 percent on such undertakings what is the NPV? 2.The compnay is somewhat unsure about the assumption of a growth rate of 5.7 percent its cash flows. At what constant growth rate would the company just break even if it still required a return of 13 percent on its investment? Show less
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