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The Argyll Corporation wants to set up a private cemetery business. According to the CFO,...

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Finance

The Argyll Corporation wants to set up a private cemetery business. According to the CFO, Kepler Wessels, business is looking up. As a result, the cemetery project will provide a net cash inflow of $97,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 6 percent per year, forever. The project requires an initial investment of $1,500,000. a. If Argyll requires an 11 percent return on such undertakings, should the cemetery business be started? b. The company is somewhat unsure about the assumption of a 6 percent growth rate in its cash flows. At what constant growth rate would the company just break even if it still required an 11 percent return on investment?

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