ORCHARD LIMITED is oil and gas exploration, production and Development Company. The management of the company...
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ORCHARD LIMITED is oil and gas exploration, production and Development Company. The management of the company intend to purchase some sub-sea equipment's worth Ghc 20 million. A loan of Ghe 15 million is negotiated with Secure Finance Company. The balance of Ghe 5 million is to be source out external. The terms of the loan is as follows; i. Duration of the loan is for 15 years. ii. Rate of interest is fixed at 10% per annum throughout the 15 years, iii. The annual interest charge is to calculated on the balance outstanding at the beginning of the year iv. Repayment is to be in 15 equal annual instalments v. Each instalment would include both interest and capital. Required; a) What is the value of the annual payment over the 15 years? b) Assume the value of the sub-sea equipment's were to appreciate at the rate of 7% per annum, what would be the value, in 15 years' time, of the sub-sea equipment purchase now at Ghe 20 million. ORCHARD LIMITED is oil and gas exploration, production and Development Company. The management of the company intend to purchase some sub-sea equipment's worth Ghc 20 million. A loan of Ghe 15 million is negotiated with Secure Finance Company. The balance of Ghe 5 million is to be source out external. The terms of the loan is as follows; i. Duration of the loan is for 15 years. ii. Rate of interest is fixed at 10% per annum throughout the 15 years, iii. The annual interest charge is to calculated on the balance outstanding at the beginning of the year iv. Repayment is to be in 15 equal annual instalments v. Each instalment would include both interest and capital. Required; a) What is the value of the annual payment over the 15 years? b) Assume the value of the sub-sea equipment's were to appreciate at the rate of 7% per annum, what would be the value, in 15 years' time, of the sub-sea equipment purchase now at Ghe 20 million.
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Related Book For
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073398242
11th edition
Authors: Ferdinand Beer, E. Russell Johnston Jr., David Mazurek, Phillip Cornwell, Brian Self
Posted Date:
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