1. Compute the following and show working:

a) You borrow N900,000 from your bank for 1 year at 20% annual interest. The bank requires that you maintain a minimum balance of N15,000 in the account at all times. The bank also imposes a Handling Charge of N5,000 for processing the loan. Compute the effective interest rate on the loan.

b) How much should you pay today for a promise to receive N1 million in 10 years if the prevailing rate of interest is 15% today and is expected to prevail during the 10 years?

c) You deposited N500,000 in your bank account and after 5 years the deposit had grown to N805,500. At what rate of interest had the bank been compounding the interest yearly on the deposit?

d) You deposit N700,000 in a bank today for 4 years at 12% annual interest. The interest on the deposit is compounded quarterly. How much will the deposit grow to at the end of 4 years?

e) A farmer had buried N500,000 on his farm. His son had convinced him to take the money to a bank. The farmer decided to take only N400,000 to his son's bank. If the Cash Reserve Ratio is 27.5% and the Liquidity Ratio is 30%, what quantum of new money will the banking system create out of the farmer's deposit?

f) A project costs N3 million and is expected to last for 10 years, yielding a cash flow of N500,000 yearly. If the cost of capital is 20%, what is the Net Present Value (NPV) of the project? Should be project be adopted?