Please do Not answer by showing the spreading sheet layout!The Yurdone

QUESTION

Please do Not answer by showing the spreading sheet layout!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 $ 60,000 for the firm during
a) first year net cash inflows = $ 60,000 projected growth rate = 6 % per year forever initial investment of the project = $ 925,000 NPV = (PV of cash inflows PV of cash outflows) PV of cash outflows = $ 925,000 PV of cash inflows = cash inflows / (R g) = 60,000 / (.13 .06) = $ 857,142.86 NPV = 857,142.86 925,000 NPV = $ 67,857.14 since the NPV

s negative, the corporation should not accept the project. b) NPV = 0 0 = -925,000 60,000 / (.13 g) 925,000 = 60,000 / (.13 g) 925,000(.13 g) = 60,000 .13 g = .06486 g = .06514 = 6.514 % at 6.514 % the corporation would break even.

ANSWER:

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