Question $2$

A special council amenity costs $K500,000$ and its useful life is planned over $25$

years. If the reducing balance depreciation method is used at a $10\%$ rate, what is

the book value of the amenity at the end of its life?

$[3$ marks$]$

An arithmetic progression has $3$ as its first term. Also, the sum of the first $8$ terms

is twice the sum of the first $5$ terms. Find the common difference.

$[4$ marks$]$

A firm is considering a capital project with a net cash flow as follows

Calculate the Internal Rate of Return$($IRR$)$ for the project using $r_1=6\%$ and

$r_2=15\%.$ Based on the calculated value for the IRR, What recommendation will

you give the firm concerning the project?

Question $3$

Ottis earns $k500,000$ per annum for the first year and expected to receive yearly

increment of $5\%.$ What would be Otiis's salary at $5^{th}$ year?

$3$ marks

How much should you pay for an annuity of $K1,000$ a year payable in arrears

quarterly for $20$ yeas, assuming an interest rate of $6\%$ per annum.

$4$ marks

Assume that you want to buy a brand new lexus. But since you do not have the

fund $(F)$ at the moment, you decide to deposit a fixed ${\displaystyle \underset{?}{\overset{?}{}}}(A_0)$ at the start of cach

year in a savings bank account and interest is compounded annually at $r\%.$ Show

that the value of this fund after a period of $t$ years is

$F=A_0(1+r)\frac{(1+r{)}^t-1}{r}.$