11). Net cash flow (year 1) $ 31,000 Cash flow growth per year 4.5% Initial investment $ 1,050,000...

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11). Net cash flow (year 1) $ 31,000 Cash flow growth per year 4.5% Initial investment $ 1,050,000...

11).

Net cash flow (year 1)	$ 31,000
Cash flow growth per year	4.5%
Initial investment	$ 1,050,000
Required return	10%
	.
Calculate the breakeven growth rate for the company?

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Answer 1

Answer #1

Break even growth rate is the rate at which Initial investment is equal to the present value of cash inflows

1,050,000 = 31000/(10%-growth rate)

Growth rate = 7.0476%

i.e. 7.05%

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Answer 2

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