Berea Operations And Supply Chain Management Assignment Help – The Yurdone Corporation

Question – 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
$94,000 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 $1,470,000.
a-
1
What is the NPV for the project if Yurdone’s required return is 12 percent? (Negative amount
should be indicated by a minus sign. Do not round intermediate calculations and round
your final answer to 2 decimal places. (e.g., 32.16))

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NPV $

a-
2
If Yurdone requires a return of 12 percent on such undertakings, should the firm accept or reject
the …Read Moreproject?

Reject
Accept

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? (Round your answer to 2 decimal places. (e.g., 32.16))

Constant growth rate % …Read Less

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