b. In fifteen years time you will require an amount of GHC405,000 to buy a house. You have an amount of GHC 90,000 which you intend to invest over fifteen years at an interest rate of 12% to enable you purchase the house. 1. Will your investment be sufficient to buy the house? At what interest rate will your investment be sufficient to buy the house in fifteen years? c. With reference to cash flow what is the difference between a perpetuity and an annuity? d. A twenty year annual constant cash flow of GHC4,500 starts from today i. What is the present value if the ruling interest rate is 30%? ii. What would be the present value if the cash flow were a perpetuity and was to start at the beginning of the fifth year? Question 2 A project will require an initial investment of GHC 950,000 with a terminal value of GHC30,000) Sale in the first year is estimated to be 20,000 units. This is expected increase by 15% annually up to a maximum demand of 30,000. The project will have an eight year life. Selling price per unit will be GHC30, with a variable cost of GHC20 all at today's prices. A bank has offered to finance the project at an interest rate of 24% Required: i. Calculate the Net Present value of the Investment ii. What is the Internal Rate of Return? iii. Advise Management of Agape LTD whether the project should be undertaken or not on purely financial grounds. All calculations should be to the nearest whole number. 1