Question: Question 3 The Asset Based Finance team is looking at introducing a new product, Crop Spraying Drones Finance. Currently no LGD observed outcome data is

Question

3

The Asset Based Finance team is looking at introducing a new product, Crop Spraying Drones Finance. Currently no LGD observed outcome data is available for this asset. However before launching of this asset type, part of an official offering, finance is looking for indicative pricing for an existing well embedded client that requires a R

50

mil loan to purchase these drones. We will be charging a

1 %

facility fee for this facility, but we need proposed interest rate to go back to the customer. It would be a

12 -

month loan with a bullet repayment.

Construct a basic income statement of for this deal as you would expect to have as an output for a pricing model. Target a ROE of

30 %

and solve a for a rate.

Here are assumptions that can be made in this calculation, but please state any additional assumptions made.

\

table

[[

, 1 %

Question 3 The Asset Based Finance team is looking at introducing

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