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5. A Chinese investor is to set iffentiate between nominal and effective interestrate County. The cost of investment will be Kshs 35 million. It will
5. A Chinese investor is to set iffentiate between nominal and effective interestrate County. The cost of investment will be Kshs 35 million. It will process 1,000 tons of raw nuts p.a, with 80% of these being usable nuts and rest being waste. Raw nuts costs shs 50/kg. The usable nut sells at shs 100/kg and waste is sold at 10/Kg. The plant will use shs 250,000 worth of utilities p.m and shs 500,000 of labour p.m, while repairs and all other costs p.a will be 20% of investment cost. Kshs 2 million, 3 million, and 5 million will be the required payables, stocks and cash respectively. Annual depeciation will be 10% of investment costs. After 10 years the plant can be sold at 12 million. Develop the cashflow for the investment for the 10 years. Tax rate is 20% NC=P+secA=P1(1+r)r()A=F(1+r)n1() (9Mks)
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