Question: (10 points) A) An engineer takes a loan form a lending company equals to $10,000. The lending company takes X % annual interest rate compounded
(10 points) 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. Determine the annual effective interest rate (2 points) 2) Determine the annual nominal interest rate. (1 points) B) For the cash flow below, Year O1 2 3 4 Revenues | 25000 15000 4000 18000 Cost S 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)
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