Melon Husk Co. is evaluating a new expansion project. The financial team is working on...
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Melon Husk Co. is evaluating a new expansion project. The financial team is working on determining the estimated growth rate for this venture and the annual cash flows are projected to grow at a rate of 7.5% per year forever. However, they are unsure about the growth rate assumption. The expansion requires an initial investment of $61,000, and it will provide a net cash inflow of $5,000 in Year 1, and $6,300 in Year 2. For the subsequent years, the net cash inflow will grow at a constant rate indefinitely. If the cost of capital is 15.3%, what miminum constant rate of growth should the company seek in this project to make it feasible? A' Answer the question according to the following example. If the miminum growth rate is 9.97392%, round it to two decimals without typing the percentage sign: 9.97. Precision will be enforced to earn points.
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