A Venture Will Provide a Net Cash Inflow of $57,000

question 12

Multiple Choice

A venture will provide a net cash inflow of $57,000 in Year 1. The annual cash flows are projected to grow at a rate of 7 percent per year forever. The project requires an initial investment of $739,000 and has a required return of 15.6 percent. The company is somewhat unsure about the growth rate assumption. At what constant rate of growth would the company just break even?

• A) 9.48 percent
• B) 9.29 percent
• C) 7.89 percent
• D) 8.49 percent
• E) 7.75 percent

---

Definitions:

Balanced Scorecard Approach

A strategy performance management tool that views an organization from four perspectives: financial, customer, process, and learning and growth.

Financial Measures

Quantitative metrics used to gauge a company's performance, financial health, and results over a specific period.

Income Statements

Financial statements that summarize a company's revenue, expenses, and profits over a specific period of time.

Standard Cost

A predetermined cost of manufacturing, delivering, or producing goods or services under normal conditions.