Consider escalation rates of 10% for all costs, 11% for all incomes, and an inflation rate of 3% applied to the following cash flow:

a. Calculate the ROR in escalated dollars and in constant dollars for this investment project (15 points).

b. Calculate the NPV in escalated dollars and in constant dollars for this investment project assuming a 12.5% escalated dollar minimum rate of return (15 points).

Hint: To calculate the NPV in constant dollars, you need to calculate the constant dollar minimum rate of return.

Year Cost Income C) E--25,000 9,000 | 8,000 | 7,000 | 6,000 | 9,000 | 8,000 | 7,000 | 6,000 | 5,000 | L=15,000 C) C) C) C) C) C) C) C) C) C: Cost, I: Income, E: Environmental Remediation Cost, L: Salvage Value Year Cost Income C) E--25,000 9,000 | 8,000 | 7,000 | 6,000 | 9,000 | 8,000 | 7,000 | 6,000 | 5,000 | L=15,000 C) C) C) C) C) C) C) C) C) C: Cost, I: Income, E: Environmental Remediation Cost, L: Salvage Value