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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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