1. 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 $109,000 for the firm during the first year and the cash flows are projected to grow at a rate of 5.1% per year forever. The project requires an initial investment of $1,425,000. Answer the following questions:

a. If the required return is 12%, should the business be "undertaken"?

b. What is the IRR?

c. At what minimum permanent growth rate in cash flows would the company be indifferent between pursuing the project and not pursuing the project?