3. You have a potential project with an initial cost (Year 0) of $80,000 that would begin next year. You would like to make an informed decision based on the rate of returns. The annual revenues and expenses are as follows: 15.400 Year Revenue Expense 10,000 1,000 2 12,000 2,000 3 13,000 3,000 4 14.000 4,000 14.000 5,000 14.000 6,000 15.000 8,000 15,200 10.000 9 0 10 16.200 (a) What is the NPV assuming an interest rate of 5% compounded annually? (b) What is the NPV assuming an interest rate of 5% compounded continuously? (c) Using Goal Seek in Excel's What If analysis, what is the internal rate of return with annual compounding? (d) What is the internal rate of return with continuous compounding? (e) As an alternative, you could invest your $80.000 at the local Credit Union and receive a 3.8% annual rate of return. What should you do? 1.000 3. You have a potential project with an initial cost (Year 0) of $80,000 that would begin next year. You would like to make an informed decision based on the rate of returns. The annual revenues and expenses are as follows: 15.400 Year Revenue Expense 10,000 1,000 2 12,000 2,000 3 13,000 3,000 4 14.000 4,000 14.000 5,000 14.000 6,000 15.000 8,000 15,200 10.000 9 0 10 16.200 (a) What is the NPV assuming an interest rate of 5% compounded annually? (b) What is the NPV assuming an interest rate of 5% compounded continuously? (c) Using Goal Seek in Excel's What If analysis, what is the internal rate of return with annual compounding? (d) What is the internal rate of return with continuous compounding? (e) As an alternative, you could invest your $80.000 at the local Credit Union and receive a 3.8% annual rate of return. What should you do? 1.000