What is the constant growth rate

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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 $102,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 5 percent per year forever. The project requires an initial investment of $1,550,000. The company is somewhat unsure about the assumption of a growth rate of 5 percent in its cash flows. What is the constant growth rate that the company would break even if it still required a return of 10 percent on investment?

Reference no: EM132898095

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