Annual income have to increase to maintain

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Reference no: EM131899615

Consider the following financial data for a project:

$90,000 = initial investment

$10,000 = salvage value

6 years = project life

$27,000 = annual revenue

$8,000 = annual expenses

Answer the following questions:

a) What is the 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)?

Reference no: EM131899615

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