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 $315,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 4.5 percent per year forever. The project requires an initial investment of $4,100,000.

a) If Yurdone requires a return of 11% on such undertakings should the cemetary business be started?

b) The company is somewhat unsure about the assumption of a 4.5 percent growth rate in its cash flows. At what constant growth rate would the company just break even if it still required a return of 11 percent on investment?