by the lessor if it leases. What is the net advantage to leasing (NAL)? (5 marks) Kwaku Mensah is a 40-year-old employee of the Legon Company who will retire at age 60 and expects to live to age 75. The firm has promised a retirement income of GHS 20,000 at the end of each year following retirement until death. The firm's pension fund is expected to earn 7 percent annually on its assets and the firm uses 7% to discount pension benefits. What is Legon Company's annual pension contribution to the nearest Ghana Cedi for Mr. Mensah? (Assume certainty and end-of-year cash flows.) (5 marks) v. Suppose you believe that Benso Oil stock price is going to increase from its current level of GHS 22.50 sometime during the next 5 months. For GHS 3.10 you can buy a 5-month call option giving you the right to buy 1 share at a price of GHS 25 per share. If you buy this option for GHS 3.10 and Benso Oil stock price actually rises to GHS 45, what would your pre-tax net profit be? (5 marks) Question Eight Southeast Tile Distributors Inc. is a building tile wholesaler that originated in Kumasi but is now considering expansion throughout the region to take advantage of continued strong population growth. The company has been a "mom and pop" operation supplemented by part-time workers, so it currently has no corporate retirement plan. However, the firm's owner, Zita Mensah, believes that it will be necessary to start a corporate pension plan to attract the quality employees needed to make the expansion succeed. Zita has asked you, a recent business school graduate who has just joined the firm, to learn all that you can about pension funds, and then prepare a briefing paper on the subject. To help you get started, he sketched out the following questions: a. Assume that an employee joins the firm at age 25, works for 40 years to age 65, and then retires. The employee lives another 15 years, to age 80, and during retirement draws a pension of GHS 20,000 at the end of each year. How much must the firm contribute annually (at year-end) over the employee's working life to fully fund the plan by retirement age if the plan's actuarial expected rate of return is 10% and its assumed interest rate for discounting pension benefits also is 10% Draw a graph which shows the value of the employee's pension fund