(5) Graph: 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:

	T=0	1	2	3	4	5	6	7
Project A	-3790	200	600	300	1000	2800
Project B	-3790	1000	1000	1000	1000	1000
Project C	-3790	0	0	0	0	0	0	5400

(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?

(d) (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.