1. Jesus Saves Ltd. is offering 2 million units of 10-year bonds with a face value of GH¢100  each. Though the bonds are being offered at a price of GH¢95 each, the bonds will be  redeemed at GH¢110. The annual coupon rate of the bonds is 15%. Interest is payable at  the end of every six months. A provision in the bond indenture requires that Jesus Saves  Ltd. establishes a sinking fund to accumulate enough money to pay the total redemption  value of the bonds upon maturity. To comply with this provision, Jesus Saves Ltd. plans to  set aside an even amount at the end of each quarter over the next 15 years. Each of the even  amounts that will be set aside will be invested at an annual interest rate of 12% with  quarterly compounding. Calculate the even amount that should be put into the sinking fund  at the end of each quarter to raise enough money to pay the total redemption value of the  bonds.

2. God is king Ltd. is embarking on long-term investment, involving an immediate outlay of  GH¢25,000 which they intend financing by retained profits. Expected annual net cash profits are as follows: 

Years 1 to 4: GH¢3,000 

Years 5 to 7: GH¢5,000 

Year 8 onwards forever: GH¢7,000 

The company discounts all projects lasting ten years' duration or less at a cost of capital of  10% and all other projects at a cost of 13%. You may ignore taxation . Find the Net present value

Answer rating: 100% (QA)

Lets start with the first question Jesus Saves Ltd Sinking Fund Calculation To calculate the even amount that should be put into the sinking fund at t... View the full answer