A) An engineer takes a loan form a lending company equals to $10,000. The lending company takes X % annual interest rate compounded quarterly. The engineer agrees to pay off the loan in 10 equal payments at $1200/year.

1. Determine the annual effective interest rate (2 points)

2. Determine the annual nominal interest rate. (1 points)

B) For the cash flow below,

Year	0	1	2	3	4
Revenues $		25000	15000	4000	18000
Cost $	6000	30000	7000	6000	14000

3. Are there multiple rates of return values for this cash flow (apply the two rules)? (2 points)

1. Find the external rate of return using the modified rate of return approach (MIRR), an investment rate of 12% per year, and a borrowing rate of 8%. Assuming that the MARR =10%. (4 points)

2. Is this project justified or not and why? (1 point)