Question $19$

a$.$ Your company will generate GH$55,000$ in annual revenue each year for the next eight years

from a new information database. The computer system needed to set up the database costs

GH$250,000.$ If you can borrow the money to buy the computer system at $7\mathrm{.}5$ percent annual

interest, can you afford the new system?

b$.$ An investment offers GH$2,250$ per year for $15$ years, with the first payment occurring one

year from now. If the required return is $10$ percent, what is the value of the investment? What

would the value be if the payments occurred for $40$ years? For $75$ years? Forever?

c$.$ You want to have GH$50,000$ in your savings account five years from now, and you$$re

prepared to make equal annual deposits into the account at the end of each year. If the account

pays $9\mathrm{.}5$ percent interest, what amount must you deposit each year?

d$.$ First National Bank charges $7\mathrm{.}5$ percent compounded quarterly on its business loans. First

United Bank charges $7\mathrm{.}5$ percent compounded semi$-$annually. As a potential borrower, which

bank would you go to for a new loan?