1. Consider an escalation rate of 25% for all costs (including environmental remediation cost) and 30% for all incomes (including salvage value) for a project. At the end of 11^th year, the project has a salvage value of $20,000 and an environmental remediation cost of $25,000.

Year	0	1	2	3	4	5	6	7	8	9	10	11
Cost	-50,000	-16,000	0	0	0	0	0	0	0	0	0	0
Income	0	18,000	29,000	12,000	12,000	11,000	11,000	9,000	9,000	9,000	8,000	7,000

1. Calculate the escalated-dollar cash flow
2. Calculate the escalated-dollar IRR
3. Calculate the escalated-dollar NPV, using an escalated-dollar minimum rate of return of 15%.

2. Same as question 1, but now consider an inflation rate of 9%:

1. Calculate the constant-dollar cash flow
2. Calculate the constant-dollar IRR
3. Calculate the constant-dollar NPV using a constant-dollar minimum rate of return of 15%

3. Consider an escalation rate of 30% for all costs, 50% for all incomes, and an inflation rate of 9% for the following cash flow. At the end of project life, abandonment cost will be $30,000 and equipment could be sold for $35,000.

Year	0	1	2	3	4	5	6	7	8	9
Cost	-30,000	0	0	0	-10,000	0	0	0	0	0
Income	0	11,500	9,500	9,900	9,900	9,900	9,900	9,900	9,900	9,900

1. Calculate the IRR in escalated dollars and in constant dollars for this project.
2. Calculate the NPV in escalated dollars for this project with an escalated-dollar minimum rate of return of 15%.
3. Calculate the NPV in constant dollars for this project with an constant-dollar minimum rate of return of 15%.