Elikplim Atayo took a loan facility of 1,000,000 from Amegbletor Bank ltd. He agreed to

repay the loan monthly over a period of ten years. The interest charged by the bank is 6% per

year, compounded monthly. If Elikplim Atayo repays the loan at the end of each month,

Calculate the amount Elikplim will pay on monthly for the settlement of the loan. 5 marks

b). GCB Ltd issued 10m of new bonds with 1000 face value. The bonds have 10 years to

maturity and carries 5% coupon rate. If the rate of return is 6%, how much is the corporation

borrowing? What type of bond is this? 7 Marks

c). Mr. Adomako and Mr. Bonsu are vice presidents of Databank Mutual Insurance Company

and co-directors of the companys pension fund management division. An important new client,

the Ghana Municipal Assembly Alliance, has requested that Databank present an investment

seminar to the mayors of the represented cities, and Mr. Adomako and Mr. Bonsu who will make

the actual presentation, have asked you to help them by answering the following question.

What are the key features of a bond as compared to a stock? 8 marks

d). Sims Ltd has just announced a dividend of 10 on its ordinary shares. Given that dividends

are expected to grow at a constant rate of 10 percent over a long period of time and the investors

required return is 14 percent? Using the dividend valuation model, calculate a fair price for Sims

Ltd equity share