Reference no: EM132943538

Questions -

Q1. Godfred & Sam are both at 40. At 20, Sam started saving GH¢100 per month at a bank that pays him 10% per annum towards his retirement. 10 years later Godfred opened a similar account, except that his contributions were GH¢200 at the end of each month also towards his retirement. Would you rather be Sam or Godfred?

Q2. Assuming you bought a 182-day Treasury Bill with a face value GH¢20,000.00 and held it for 45 days. If you want to sell it and interest rate is currently at 25%, at what price will you sell it?

Q3. A Treasurer buys a 6-month CD issued by a top-class bank with a tenor of 180 days at a yield of 16%. The face value at issue is GH¢10m. In 90-days time the buyer sells the CD when the 3-month secondary market for CDs issued in the names of top-class banks is 15.40/14.50. The buyer has held the CD for 90days, but now wants his cash back. What is the return on the investment for the Treasurer?

Q4. The demand for a commodity is 40,000 units a year, at a steady rate. It costs ¢20 to place an order, and 40p to hold a unit for a year. Find:

a) the order size to minimise stock costs

b) number of orders placed each year

c) the length of the stock cycle

Q5. Suppose a firm has T- bill that can be sold on the secondary market for cash each time it needs cash. The cost of discounting the T-bill is GH ¢4,000 a month, what is the optimal amount of T-bills that the firm should sell each time it needs to do so in order to optimize transaction costs and interest income.

Q6. You want to begin saving for your retirement. You plan to contribute $12,000 to the account at the end of this year. You anticipate you will be able to increase your annual contributions by 3% each year for the next 45 years. If your expected annual return is 8%, how much do you expect to have in your retirement account when you retire in 45 years?