1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Fed [463]
4 years ago
15

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking u

p". As a result, the cemetery project will provide a net cash inflow of $91,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 3 percent per year forever. The project requires an initial investment of $1,440,000.
a. What is the NPV for the project if Yurdone's required return is 12 percent?
b. The company is somewhat unsure about the assumption of a 3 percent growth rate in its cash flows. At what constant growth rate would the company just break even if it still required a return of 12 percent on investment?
Business
1 answer:
icang [17]4 years ago
6 0

Answer:

A) NPV= - $428,888.89 B) Company would break Even if g = 5.68%

Explanation:

Hi, we have to bring to present value all the inflows and outflows of cash, this is the formula to use and the math of it.

NPV=-Invesment+\frac{CashFlowYr1}{(return-growth)}

NPV=-1440000+\frac{91000}{(0.12-0.03)} = -428888.89

The question says that "at what constant growth rate would the company just break even..." and well, a NPV=0 is not precisely break even, actually, it means that the company is obtaining exactly what is asking for any investment, but let´s assume that the question was, what should the growth rate be for the company to accept this project?. So we have to solve the first equation for "g", that is:

g=\frac{(Invesment*return-CashFlowYr1)}{Invesment} =\frac{(1440000*0.12-91000)}{1440000} =0.0568

So the constant growth rate has to be at least 5.68% for the company to accept this project (NPV=0)

Best of luck

You might be interested in
Describe how the biodiversity crisis extends throughout the hierarchy of biological organization.
daser333 [38]

Answer:

Explained below:

Explanation:

It is really true that biodiversity crisis is continuously increasing as many biological groups reported that some varieties of species started to speedily die and specimen report shows that there have been five periods of mass abolition in history with much large scales of species destruction, and the rate of species extinction now is comparable to those times of mass destruction. Definitely, three human actions have a notable impact; the decline of habitat, the entrance of exotic species and advance accumulation.

4 0
3 years ago
A(n) blank______ model is a plan that details how a company creates, delivers, and generates revenues.
Lelechka [254]

A(n) blank Business model is a plan that details how a company creates, delivers, and generates revenues.

<h3>What exactly is a business model?</h3>

An organization's conceptual framework, which includes its mission, objectives, and continuing strategies for accomplishing them, is known as a business model.

A business model is essentially a specification outlining how a company achieves its goals.

<h3>A successful business model is what?</h3>

As an illustration, Clay Christensen of Harvard Company School proposes that a business model should include four components: a customer value proposition, a profit formula, essential resources, and key procedures.

Learn more about Business model :

brainly.com/question/24448358

#SPJ4

6 0
2 years ago
A conservative investor has a portfolio that consists of diversified investments in equity securities, debt securities, and mone
satela [25.4K]

Answer:

Real Estate-Related Investments.

Explanation:

Real estate related investments involves the purchase, management, renting and sale of real estate properties with the aim of making profit.

Real estate investment is capital intensive and has low liquidity compared to other forms of investment.

This will be a good option for the conservative investor because real estate investment is stable and not prone to huge losses that can be incurred in the money markets. Also real estate is not affected by equities market. So will be a safety net in case of failure in the equity market.

4 0
3 years ago
There may be a maximum balance requirement for a savings account.<br> True<br> False
luda_lava [24]

Answer:

true

Explanation:

For example, if a bank account has a $100 minimum balance requirement, you want to make sure that you don't let your balance fall to $99.99 or less.

4 0
3 years ago
Luis consulting started the year with total assets of $60,000 and total liabilities of $17,000. during the year, the business re
BARSIC [14]
Owner's equity at the beginning of the year is
Assets-liabilities
60,000−17,000=43,000

Owner's equity at the end of the year is
Beginning balance+revenues-expenses+additional investment-withdrawal amount
43,000+48,000−36,000
+8,000−9,000
=54,000

Owner's equity changed by
ending balance-beginning balance
54,000−43,000=11,000. ..answer
6 0
4 years ago
Other questions:
  • Three Bears Manufacturing produces an autominus−quartz watch movement called OM362. Three Bears expects to sell 19,000 units of
    5·1 answer
  • Infinity Clock Company prepared the following static budget for the​ year: Static Budget ​Units/Volume 5 comma 000 Per Unit Sale
    10·1 answer
  • During the Reagan administration, the Laffer curve was used to argue that: a. lower income tax rates could increase tax revenues
    12·1 answer
  • When looking for capital, bankers and other lenders will usually feel most comfortable investing in a/an
    7·1 answer
  • Courier Logistics Corp. will issue $2,400,000 in 8-year bonds that pay 5% annually. The market rate for bonds of similar riskine
    7·1 answer
  • Choose the best and worst answer to the following question:
    5·1 answer
  • Profit plays an important role in business give any four reason to justify the statement
    10·1 answer
  • A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from
    11·1 answer
  • KSB is considering a project that will require $39,000 in net working capital and $68,000 in fixed assets. The project is expect
    6·1 answer
  • The following statement is true for which levels of government?
    6·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!