Please answer question 5 (a to c)

5. (a) An investor is to pay K40,000 for a property. The investor will then be entitled to receive rent payments for 90 years payable at the end of each year at a constant rate for the first 30 years, increasing to double that rate for the next 30 years and three times that rate for the remaining 30 years. The value of the property at the end of the 90 years is expected to be K3,236.000. Find the amount of the rent payable in the first year, if the investor expects to obtain a rate of return of 40% on the purchase. Page 3 (b) (i) A price P is paid in return for a series of interest payments of I payable at the end of each of the next n years and a final redemption payment of R payable at the end of the n years. Find R, if P=95, 1 = 4, i = 7% and n=9. (ii) A company has just bought an office block for K70 million, which it will rent out to a number of small businesses. The total rent for the first year will be K2 million increasing by 3% pa compound in each future year. It will be sold after 10 years for K90 million. Assuming that rent is paid in the middle of each year, calculate the yield the company will obtain on this investment. Ignore tax. (c) A loan is to be repaid by an immediate annuity. The annuity starts at a rate of K2,200 pa and increases by K150 per annum. The annuity is paid for 15 years. Repayments are calculated using a rate of interest of 12% pa effective. (i) Calculate the amount of the loan. (ii) Construct a loan schedule showing the capital and interest elements in and the amount of loan outstanding after the 9th and 10th payments. (iii) Find the capital and interest element of the last instalment. 5. (a) An investor is to pay K40,000 for a property. The investor will then be entitled to receive rent payments for 90 years payable at the end of each year at a constant rate for the first 30 years, increasing to double that rate for the next 30 years and three times that rate for the remaining 30 years. The value of the property at the end of the 90 years is expected to be K3,236.000. Find the amount of the rent payable in the first year, if the investor expects to obtain a rate of return of 40% on the purchase. Page 3 (b) (i) A price P is paid in return for a series of interest payments of I payable at the end of each of the next n years and a final redemption payment of R payable at the end of the n years. Find R, if P=95, 1 = 4, i = 7% and n=9. (ii) A company has just bought an office block for K70 million, which it will rent out to a number of small businesses. The total rent for the first year will be K2 million increasing by 3% pa compound in each future year. It will be sold after 10 years for K90 million. Assuming that rent is paid in the middle of each year, calculate the yield the company will obtain on this investment. Ignore tax. (c) A loan is to be repaid by an immediate annuity. The annuity starts at a rate of K2,200 pa and increases by K150 per annum. The annuity is paid for 15 years. Repayments are calculated using a rate of interest of 12% pa effective. (i) Calculate the amount of the loan. (ii) Construct a loan schedule showing the capital and interest elements in and the amount of loan outstanding after the 9th and 10th payments. (iii) Find the capital and interest element of the last instalment