The University of Lusaka (Unilus) is evaluating the possibility of using project finance to construct hostels that will meet the growing demand for accommodation by its students. The plan is to have a 5-floor building with 100 rooms on each floor accommodating 4 students per room. Each student will pay about K10,000 per month but due to seasonality occupancy is expected to be at 75% p.a. The building is estimated to cost K1 billion. Using a Debt: Equity ratio of 80%:20%, any financing cost will have interest of about 15%. Assume that the project is tax exempt as per an agreement with the Zambian government. Unilus plans to finance the whole equity in the project and identify providers of debt. Operational costs are estimated at 50% before considering return to debt and equity holders. The debt providers are expected to operate the hostels until the debt is paid, then Unilus will take over the management of the Hostels. The agreement is that any excess amounts after financing the debt will be paid to Unilus. It is estimated that construction will be completed in the next two years and then operations commence immediately until about 10 years when the debt is fully paid.

Required:

a).Draw / Writeup a simple structure for the project and explain the role of FOUR main participants in the project

b).Identify FIVE sources of finance for debt that Unilus can use in financing the Project