Q1. Assume that it is now January 1 20X4 and you will need GHC10,000 on January 1 20X8, your bank compounds interest at an 8 percent annual rate.

I. How much must you deposit on January 1, 20X5, to have a balance of GH 10,000 on January 1, 20X8? 3 marks

II. If you want to make an equal payments on each January 1 from 20X5 through 20X8 to accumulate the GH10,000, how large must each of the four payments be? 3 marks

III. If your uncle were to offer either to make the payments calculated in (II) or to give you a lump sum of GH7,500 on January 1 20X5, which would you choose? 3 marks