B. The Kumasi Metropolitan Assembly is considering building a foot bridge across the Wewe River which crosses the KNUST at two key points. Two proposals are being considered for bridges at different sites. The costs of each of the proposals are summarized as follows

COSTS

Initial cost of Bridge

Initial Cost of road works Annual maintenance of bridge

Annual maintenance of roads Life of Bridge

Life of roads

BRIDGE A

GHC 660,000 70,000 GHC 6,000

GHC 5,000 60 years 60 years

BRIDGE B

GHC 5,000 for first 15 years and GHC 11,000 there after

GHC 2,500 30 years 60 ears

GHC 600,000 GHC 60,000

i. If cost of capital is 9% and making the assessment in terms of present worth which proposal should be adopted and why?

ii. What will be equivalent annual cost of the bridges

iii. The discounted cash flow method is hinged on the assertion of time value of money.

Discuss the possible effects of .Inflation

. Interest

. Taxation on the expected outcome of an investment project.