1. Your company estimates it will have to replace one of its delivery cars five years from now. The replacement is estimated to cost not less than GH160,000 which it plans to finance by depositing an equal amount at the end of each month into an account with a return of 0.90% per month. What is the amount to be deposited each month in order to realize the required amount? 2. Your bank has offered you a loan of GH100,000 at 20% per year compounded quarterly. The loan, plus interest is to be repaid in full in 3 years. To avoid default, you plan depositing an equal amount at the end of each year into a savings account that pays interest at 12% per year. a. What is the total amount you will have to pay the bank at the end of the loan period? b. What is the equal amount you should deposit into the savings account in order to fulfil the loan obligation at the end of year three? c. Provide a sinking fund schedule for the accumulation of fund in the savings account towards paying down the loan at the end of year 3. 3. A loan of GH 50000 is to be paid in 5 equal annual installments at a rate of 15% per annum.

a. Find the amount of equal payments.

b. Draw an amortization schedule for this problem.

c. How much debt will be outstanding after the 3rd installment? 4. A manufacturing company intends to purchase new equipment costing GH2 m. The money required to buy the equipment is to be provided as a loan by the companys bankers. The agreed rate of interest is 20% per annum compounded annually. The loan is repayable in full with interest at the end of 5 years. To provide for this eventual repayment, the Board of Directors of the company has decided to set aside, an equal annual amount at the end of each year, and invest in a fund that will earn 25 percent per annum interest, with interest compounded annually.