The Fit & Trim company uses the modified internal rate of return. The firm has a cost of capital of 12 percent. The project being analyzed is as follows ($27,000 investment):

Year	Cash Flow
1............	$15,000
2............	12,000
3............	9,000

a. What is the modified internal rate of return? An approximation from Appendix B is adequate.

b. Assume the traditional internal rate of return on the investment is 17.5 percent. Explain why your answer in part a would be lower.