Arikpo Properties Ltd. a properties development company has been your customer over the past ten years since its inception, bringing your bank impressive inflows of cash. Arikpo Properties was founded by Mr. Jacob Arikpo-Agyapong and Mrs. Mary Arikpo-Agyapong, aged 55 years and 53 years respectively. The business operates by hiring contractors to put up commercial properties on their behalf for sale to property investors, businesses, banks, supermarkets and professional services firms such as lawyers and accountants.

They have a Project Manager in the person of John Adjei, aged 40. He holds a BSc in Building Technology from the University of Business and Technology in Assin Fosu. He has been with the company since inception. Prior to this, he worked with the 21st Century Builders Ltd. for five years after his first degree.

Mrs. Arikpo takes care of the Accounts. She is a trained teacher. She left the teaching field ten yours ago to join hands with her husband in establishing the business. She is now in the final stage of her ACCA Course.

The company’s office is located on the ground floor of one of their edifices in Kasoa, which he had reserved for his business after sale of the other spaces to clients.

The business is mostly engaged in property development now as they got their fingers burnt during the first years of operation when they had devoted some of their properties to property investment.

Their account in the previous year took a downward trend and your investigations show that they took a hit with the last project when the original contractor did some shoddy work and absconded. They had to employ a new contractor who did a good job and the spaces are now up for sale. He shows you copies of cheques he has received from buyers totaling GHCS,100,000.00.

He comes to you with a new proposition. His wife has brought in additional capital by way of a ten (10) acre plot of land with an estimated value of GHCl,500,000.00 which she inherited from her late parents. The land is located in a prime area in Tema. They intend to break down the old colonial building on the property and put up a ten-storey office complex for sale to property investors, banks, supermarkets and training facilities. He has also entered into a Memorandum of Agreement with a host of property investors to take up a significant portion of the available space.

The Project details are as follows:

Cost of Plot of Land 1,500,000,00 Cost of Facilities (Roads, Utilities and Sewage) 1,500,000,00

Cumulative Project Cost Foundation 1,800,00000,0 Ist to 5th Floor 10,800,000,00 5th to 10th Floor 22,800,000,000 Finishing 28,800,000,00 Estimated Selling Price per Floor 4,500,000,00

Assumptions The bank’s policy is to provide two-thirds of the funding, if the customer is able to come up with one-third of the cost of the project plus half of the value of land and cost of installing facilities.

Critically evaluate this proposition.