NPV Valuation 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 infl ow of $50,000 for the fi rm during the fi rst year, and the cash fl ows are projected to grow at a rate of 6 percent per year forever. The project requires an initial investment of $780,000.

a. If Yurdone requires a 13 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 fl ows. At what constant growth rate would the company just break even if it still required a 13 percent return on investment? LO.1