A services provider that provides computer software systems approaches you. The company started off as a small private company and has grown strongly over the past fifteen years and listed on the Bahrain Bourse. The company has businesses in many off-shore locations, all of which are well- developed capital markets. In some parts of the world, the company has near-monopoly markets. As part of its strategy, the company uses acquisitions rather than growth to continue to expand the business. While the business is software based, it relies on continued activity in the financial markets. The company has had the same management over the past fifteen years and the senior management team are shareholders in the company. The company is rated BBB and its bonds are trading at 3.3 per cent above the comparable government bond rate, with the share price being $5.60. Your bank's experience is that the recovery rate in the event of default, the recovery rate is 50 per cent. The condensed financial accounts are as follows: SM Total current assets Total noncurrent assets 66.3 659.9 Total assets Total current liabilities Total noncurrent liabilities 243.7 Total liabilities Shareholder's funds Retained earnings 904 197.3 473.0 546.7 84.0 Shares on issue 547,612 Earnings before interest and tax is $151,608,000 on sales of $742,613,000. The firm is requesting a loan of $150 million to assist further acquisitions. a. Carry out a credit analysis on an expert (use the 6 C's approach). (6 Marks) (B1, C1, C3) b. Using Altman Z score, what is the indication of credit risk? (2 Marks) (A1, C1) Question 2 (2+2 = 4 Marks) (ILOS A1, B1, B3) You are credit analyst of Standard Chartered Bank and Mr. Mohammed is applying for car loan for 5 years. He purchased a car "Camry" for BD 10,500 including VAT on January 1, 2019. He paid down payment of BD 1,500. Remaining BD 9,000 has been approved by your senior. Bank charges 2% as processing charges. The interest rate is 6% p.a. on reducing balance. First EMI will start from January 31, 2019. You are required to calculate equated monthly installment (EMI) and prepare amortization table for first three months. You can round off your calculations in BD. Question 3 (2 Marks) (ILOS A1, B1) You are credit analyst of HSBC and Mr Ahmed is applying for home loan of BD 100,000 for 15 years. Loan of BD 100,000 has been approved by your senior. Bank is charging 3% flat rate for 15 years. You are required calculate monthly payment. Assume there is no bank processing charging.