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What quantum of new money will the banking system

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Question 1: You deposit N700,000 in a bank today for 4 years at 12% annual interest. The interest on the deposit is compounded quarterly. How much will the deposit grow to at the end of 4 years?

Question 2: A farmer had buried N500,000 on his farm. His son had convinced him to take the money to a bank. The farmer decided to take only N400,000 to his son's bank. If the Cash Reserve Ratio is 27.5% and the Liquidity Ratio is 30%, what quantum of new money will the banking system create out of the farmer's deposit?

Question 3: A project costs N3 million and is expected to last for 10 years, yielding a cash flow of N500,000 yearly. If the cost of capital is 20%, what is the Net Present Value (NPV) of the project? Should be project be adopted?

Reference no: EM132608890

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