The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M.
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The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of $126,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 5.9 percent per year forever. The project requires an initial investment of $1,490,000. | |
a. | If the company requires a return of 15 percent on such undertakings, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | The company is somewhat unsure about the assumption of a growth rate of 5.9 percent in its cash flows. At what constant growth rate would the company just break even if it still required a return of 15 percent on its investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
I found this problem here twice, once rounded to the nearest dollar and once rounded to nearest two decimal places. I have tried both with formulas and with ba II plus calculator. My assignment is not accepting either of these answers.
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780072553079
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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