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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
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 8.0% per year forever. However, they are unsure about the growth rate assumption. The expansion requires an initial investment of $69,000, and it will provide a net cash inflow of $5,200 in Year 1, and $5,200 in Year 2. For the subsequent years, the net cash inflow will grow at a constant rate indefinitely. If the cost of capital is 12.7%, what miminum constant rate of growth should the company seek in this project to make it feasible
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