Edible Oils is a family owned Zambian business whose main business line is the

production of edible oils. The distribution of its products is done through the various super

market chains across the country. Recently, there has been increased demand for its

products from the Democratic Republic of Congo $($DRC$).$ This has necessitated a need

to expand its operating capacity.

The whole project will require a total of US $$4\mathrm{.}5$ million; out of which a US $$1$ million is

reserved for working capital. Currently, the company$$s reserves are estimated at around

US$$1\mathrm{.}5$ Million. Being the Treasurer, you have been tasked together with the Chief

Financial Officer, to advise the Board on the financing options available for the raising the

balance.

Required:

a$)$ Explain the main areas of distinction between Equity and Debt financing

instruments in general. $[10$ Marks$]$

b$)$ What are the options available for the financing of working capital? $[10$ Marks$]$

c$)$ Which factors should be considered when raising the long term finance component

of the funds required? $[10$ Marks$]$

d$)$ Advise on the sources of long term finance available on the Zambian financial

markets and when would they be appropriate by Edible Oils. $[10$ Marks$]$