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A company is consicering a project that will require an investment today of $1,700,000. It will produce an after tax cash flow of $136,000 in year one, an amount that will grow at 4% per year forever. The required rate of return for this project is 11%

A. What is the net present value for this project? should the prpject be done

B. What will the next present value be if the after tax cash flow never grow (i.e. remain constant)? should the project be done at this case?

C. What is the minimum rate of growth in the after tax cash flows required to justify doing this project?

Please show calculation and formula.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92862275

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