a VW Jetta for his nephew to be used for Uber within Accra. To determine the viability of the Uber

business, Makosah made the following estimations for the cab for the coming year ending

December $2023.$ It is the company's policy to work five days a week for a $50-$week year. The

following information regarding the investment has been prepared by the Finance Manager:

To aid the acceptance of the investments in the uber business and to cater for uncertainties in the

medium term, the finance director of Mako Transport has provided the following year$-$on$-$year

forecast for the relevant variables for the next five years.

Examiners: Dr Teddy Ossei Kwakye and Dr Michael Effah Asamoah

Page $3$ of $6$

The residual value of the VW Jetta at the end of the investment period in equal to $20\%$ of the initia

investment cost of the car. The residual value is subject to a capital gain tax of $25\%.$ The corporat

tax rate for the company is $30\%$ p$.$a$.$ The target payback and discounted payback periods are $3$ anc

$5$ years, respectively, for projects of this kind. The project beta is $1\mathrm{.}50.$ The Government of Ghan:

$5-$year note is averaged at $5\mathrm{.}0\%,$ while the five$-$year averaged return on the Ghana stock exchange

is $15\%.$ The baseline acceptable rate for internal projects of such nature is $28\%.$

You are required to:

Evaluate the proposal using the following techniques:

i$)$ Net Present Value

ii$)$ Payback and Discounted Payback Period

iii$)$ Using Interpolation with a second rate of $25\%,$ estimate the rate that will equate the NPV of

the Uber Business to zero.

$(3$ marks$)$