4. You have been asked by your boss to evaluate three mutually exclusive projects. The cash flow estimates and costs of each project are given below: 2 5 6 7 T=0 -3790 1 200 Project 600 300 1000 2800 -3790 1000 1000 1000 1000 1000 Project -3790 1000 Project -3790 0 Project B Project 1000 0 1000 0 1000 0 1000 0 -3790 0 5400 540 (all numbers are in thousands of dollars) As precisely as you can, describe how the most preferred project is related to the cost of capital. 5. (a) What rate, when continuously compounded, will yield a 14% annual rate? (b) What is the effective annual rate when the 14% rate is continuously compounded? (c) Consider a cash flow of $10 every period in perpetuity starting one period from now (period t=0). What would be its price under continuous compounding of a 10% annual rate? 4. You have been asked by your boss to evaluate three mutually exclusive projects. The cash flow estimates and costs of each project are given below: 2 5 6 7 T=0 -3790 1 200 Project 600 300 1000 2800 -3790 1000 1000 1000 1000 1000 Project -3790 1000 Project -3790 0 Project B Project 1000 0 1000 0 1000 0 1000 0 -3790 0 5400 540 (all numbers are in thousands of dollars) As precisely as you can, describe how the most preferred project is related to the cost of capital. 5. (a) What rate, when continuously compounded, will yield a 14% annual rate? (b) What is the effective annual rate when the 14% rate is continuously compounded? (c) Consider a cash flow of $10 every period in perpetuity starting one period from now (period t=0). What would be its price under continuous compounding of a 10% annual rate