(a) Your business requires a loan of $150,000. OCBC bank has offered a loan facility with an interest of 10.8% compounded monthly, whereas UOB bank will charge 0.2% more, compounded semiannually. DBS bank will not charge you any interest, but a lump-sum payment of $200,000 is required three years later. Indicate which bank you should borrow from and rank the banks from the bank with the highest to the lowest preference. Show your reasoning. (10 marks) (b) Round your answers to two (2) decimal points. You are expecting to receive $25,000 in two years time when your endowment policy expires. When you receive it, you intend to invest it in a mutual fund which returns 5% per year.

Solve for (i) the amount you will have at the end of six years and (ii) the number of years you must wait for your investment to grow to $45.000, by filling in Cells B2:B5 for part (i) and Cells B9:B12 for part (ii) below. You are expected to show the relevant Excel formulas. (1) Present value Nper Rate Future value Present value 10 Nper 11 Rate Future value (6 marks) (c) Round your answers to the nearest integer. Pioneer Pte Ltd is considering two mutually exclusive projects shown as follows: Project Year Project Rhodium Iridium 1 21,000 20.000 2 22.000 20,000 19,000 35.000 4 12.000 30,000 9,000 10,000 3 The initial cash outlay for Project Rhodium and Project Iridium $55,000 and $76,000 respectively. Assume the discount rate for both projects to be 10%. Fill in values of Cells B2:C2 in the Excel table below. Solve for the net present value (NPV) and internal rate of return (IRR) for both projects. Appraise which project should be accepted. You are expected to show the relevant Excel formulas A Project Year Rhodium Project Iridium 4 3 21,000 20.000 22,000 20.000 19.000 35,000 12.000 30,000 9.000 10.000 $