Neco 2022 Government Question 28

A local government department prepares a three‑year capital improvement plan. The projected nominal costs for years\,1,\,2 and\,3 are \(\text{₦}150\) million, \(\text{₦}200\) million and \(\text{₦}250\) million respectively. Construction costs are expected to inflate at \(5\%\) per year. To preserve real purchasing power, the budget for each year must be increased by the inflation rate applied to the cumulative nominal cost up to that year. The department can obtain a grant that covers \(20\%\) of the total nominal cost over the three years, but the grant is only available if the department reduces its administrative overhead from \(12\%\) to \(8\%\) of the total nominal cost. Currently, overhead is \(12\%\) of the nominal total cost.\n\nCalculate:\n\n(a) The nominal total cost over the three years before any adjustments.\n(b) The required budget for each year after adjusting for inflation to preserve real purchasing power.\n(c) The total overhead amount before reduction.\n(d) Whether the department can qualify for the grant, and if so, the net amount of grant money after overhead reduction.