Solution and Explanation:
Answer 1 The Net present value = the Present value of all the cash inflows minus the present value of all the cash outflows
[tex]$=145000 /(11 \text { percent minus } 4 \text { percent })-1900000$[/tex]
= $171428.57
Answer a-2) yes, definitely the business should be started as the net present value is positive.
Answer b) Break even growth rate = the required rate – Cash flows / investment
[tex]=11 \%-145000 / 1900000[/tex]
= 3.37 percent.