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full answer needed : Q: Consider the following financial data for a project: initial investment 50,000$ project life 8 years salvage value 10,000$ annual revenue
full answer needed :
Q: Consider the following financial data for a project:
initial investment 50,000$
project life 8 years
salvage value 10,000$
annual revenue 25,000$
annual expenses (including income taxes) : 9,000$
(a) What is i* for this project?
(b) If the annual expense increases at a 7% rate over the previous year's expenses,
but the annual income is unchanged, what is the new i*?
(c) In part (b), at what annual rate will the annual income have to increase to maintain
the same i* obtained in part (a)?
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