1. Jesus Saves Ltd. is offering 2 million units of 10-year bonds with a face value of GH100

each. Though the bonds are being offered at a price of GH95 each, the bonds will be

redeemed at GH110. The annual coupon rate of the bonds is 15%. Interest is payable at

the end of every six months. A provision in the bond indenture requires that Jesus Saves

Ltd. establishes a sinking fund to accumulate enough money to pay the total redemption

value of the bonds upon maturity. To comply with this provision, Jesus Saves Ltd. plans to

set aside an even amount at the end of each quarter over the next 15 years. Each of the even

amounts that will be set aside will be invested at an annual interest rate of 12% with

quarterly compounding. Calculate the even amount that should be put into the sinking fund

at the end of each quarter to raise enough money to pay the total redemption value of the

bonds.

2. God is king Ltd. is embarking on long-term investment, involving an immediate outlay of

GH25,000 which they intend financing by retained profits. Expected annual net cash

profits are as follows:

Years 1 to 4: GH3,000

Years 5 to 7: GH5,000

Year 8 onwards forever: GH7,000

The company discounts all projects lasting ten years' duration or less at a cost of capital of

10% and all other projects at a cost of 13%. You may ignore taxation

Find the Net present value