The construction of the university of Ghana Business School guest center is expected to take three years. In each of the construction years, it will cost Ghc15 million plus an additional maintenance cost of Ghc4 million and Ghc5 million in year 5 and 6 respectively. The guest center is expected to generate revenue of Ghc20 million annually a year after the construction is completed. The guest center will be sold to a new owner seven years after the construction is completed. assume interest to be 10 percent Calculate the Net present value associated with this investment. Ghc

Step 1 ：The construction of the University of Ghana Business School guest center is expected to take three years. In each of the construction years, it will cost Ghc15 million plus an additional maintenance cost of Ghc4 million and Ghc5 million in year 5 and 6 respectively. The guest center is expected to generate revenue of Ghc20 million annually a year after the construction is completed. The guest center will be sold to a new owner seven years after the construction is completed. Assume interest to be 10 percent. We are to calculate the Net present value associated with this investment.

Step 2 ：The Net Present Value (NPV) is a measure of the profitability of an investment. It is calculated by subtracting the present value of cash outflows (including initial cost) from the present value of cash inflows.

Step 3 ：In this case, the cash outflows are the construction and maintenance costs, and the cash inflows are the annual revenues and the selling price of the guest center.

Step 4 ：The present value of a future cash flow is calculated by dividing the cash flow by \((1 + r)^n\), where r is the interest rate and n is the number of periods.

Step 5 ：The construction costs occur in the first three years, the maintenance costs occur in the fifth and sixth years, and the revenues occur from the fourth to the seventh year.

Step 6 ：The NPV is calculated as follows: \[NPV = PV(revenues) + PV(selling price) - PV(construction costs) - PV(maintenance costs)\]

Step 7 ：Given that the interest rate is 0.1, the construction costs are [15, 15, 15] million Ghc, the maintenance costs are [0, 0, 0, 4, 5] million Ghc, the revenues are [0, 0, 0, 20, 20, 20, 20] million Ghc, and the selling price is 20 million Ghc.

Step 8 ：The present value of the construction costs is 37.30277986476333 million Ghc, the present value of the maintenance costs is 5.836660436756057 million Ghc, the present value of the revenues is 47.63133653417418 million Ghc, and the present value of the selling price is 10.263162364614129 million Ghc.

Step 9 ：Substituting these values into the NPV formula, we get: \[NPV = 47.63133653417418 + 10.263162364614129 - 37.30277986476333 - 5.836660436756057\]

Step 10 ：Calculating the above expression, we find that the Net Present Value associated with this investment is \(\boxed{14.76}\) million Ghc.