Consider escalation rate of 10% for both cost and incomes for the following cash flow: |Co=$8,000||1=$2,000|12=$2,000||3=$3,000||4=$2,000|15=$2,500| 0 1 2 L=$1,000 3 4 5 C: Cost, I: Income, L: Salvage 1) Calculate the escalated dollar cash flow. 2) Calculate the ROR for escalated dollar. 3) Calculate NPV for escalated dollar considering 8% escalated dollar minimum rate of return Please, explain your work in detail including all the required equations and calculations.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider escalation rate of 10% for both cost and incomes for the following cash flow:
|Co=$8,000||1=$2,000|12=$2,000||3=$3,000||4=$2,000|15=$2,500|
0
1
2
L=$1,000
3
4
5
C: Cost, I: Income, L: Salvage
1) Calculate the escalated dollar cash flow.
2) Calculate the ROR for escalated dollar.
3) Calculate NPV for escalated dollar considering 8% escalated dollar minimum rate of return
Please, explain your work in detail including all the required equations and calculations.
Transcribed Image Text:Consider escalation rate of 10% for both cost and incomes for the following cash flow: |Co=$8,000||1=$2,000|12=$2,000||3=$3,000||4=$2,000|15=$2,500| 0 1 2 L=$1,000 3 4 5 C: Cost, I: Income, L: Salvage 1) Calculate the escalated dollar cash flow. 2) Calculate the ROR for escalated dollar. 3) Calculate NPV for escalated dollar considering 8% escalated dollar minimum rate of return Please, explain your work in detail including all the required equations and calculations.
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