a. Using a spreadsheet program, calculate the return on investment (ROI) for this project. Assume that the cost of capital is 7 percent.

b. How would the rate of return change if the project delivered $50,000 in additional revenue and generated cost savings of $25,000 in the first year note: I am willing to pay $7 usd

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A new IS project has been proposed that will produce not only cost savings but also an increase in revenue. The initial costs to establish the system are estimated to be $500,000. The remaining cash flow data is presented in the following table. Year 1 Year 2 Year 3 Year 4 Year 5 $0 $0 $0 $500 $100 $ 50 $ 75 $150 $ 50 $ 75 $200 $ 50 $ 75 $250 $ 50 $ 75 Increased Revenue Cost Savings Depreciation Initial Expense Note: All amounts are in 000s. A new IS project has been proposed that will produce not only cost savings but also an increase in revenue. The initial costs to establish the system are estimated to be $500,000. The remaining cash flow data is presented in the following table. Year 1 Year 2 Year 3 Year 4 Year 5 $0 $0 $0 $500 $100 $ 50 $ 75 $150 $ 50 $ 75 $200 $ 50 $ 75 $250 $ 50 $ 75 Increased Revenue Cost Savings Depreciation Initial Expense Note: All amounts are in 000s.