. The benefits arising from the construction of a dam to provide irrigation water are estimated as follows:
In the first four years after completion $250,000 per year; in the next four years $350,000 per year; in the next fifteen years $750,000 per year; in the next 50 years $400,000 per year.
– What is the present worth of these benefits at completion date if the interest rate is 5% per annum? (3.5 marks)
Q2. An investor would like to invest in a residential project that consists of 150 villas and a 10 floors building having 20 apartments with other public facilities. The project construction duration will be 5 years. The investor was advised that this investment option should be studied carefully before deciding to accept or reject this opportunity. If you are allocated to conduct this study, what processes and steps you will consider while conducting this study. Justify your answer. (2.5 marks)
Q3. An investor makes 24 consecutive annual deposits of $100,000 in a saving account that pays interest at a rate of 6% compounded quarterly:
(a) Draw the cash flow. (1.5 marks)
(b) How much of the money will be in the account 5 years after the last deposit?