In three years time, a considerable number of the plant and machinery in your company’s factory will need replacement. As the finance director of your company, you have estimated the amount of money that will be required for purchasing the replacements to be Ghc 280,000. Your company has decided to invest Ghc 10,000 at the end of every quarter at the 20% per annum compounded quarterly.

i. How much would this quarterly investments amount to at the end of the third year?

ii. What additional sum needs to be set aside now in order to provide the Ghc 280,000 at the end of the three years?

iii. Find the effective annual rate of interest.

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