What are the main risks you identify with Bastion Finance and the proposed investment? Would you recommend to Mr. Parker that he buy into Bastion Finance and why? (one paragraph). ReceiptsCash Receipts: From New Term Deposits $10.0 From Loan Customers 116.9 Total Receipts: $126.9 Cash Disbursements: Interest Payments $50.2 Salaries, Wages, Taxes, Other $ 2.3Total Disbursements $52.5 Cash Increase over the Year $74.4 ADD: Beginning Cash Balance $81.1 Cash Available During the Year $155.5 Cash Flow Cash Receipts: From New Term Deposits $10.0 From Loan customers 116.9 Total Receipts $126.9 Cash Disbursements: Interest Payments $50.2 Salaries, Wages, Taxes, Other 2.3 New Loans Made 130.0 Dividends Paid 7.0 Total Disbursements $189.5 Cash Decrease over the Year $62.6 Beginning Cash Balance 81.1

Ending Cash Balance $18.5 Accrued Interest IncomeLOANS: 506 $36.0 x .10 $3.6 405 28.6 x .15 4.3 601 76.9 x .13 10.0 602* 52.1 x .15 3.9 603* 57.2 x .13 3.7 604 96.9 x .10 9.7 605 45.6 x .14 6.4 New* VAR 130.0 x.13 8.5Total Interest Revenue $50.1 * New loans issued July 1, Loans 602 and 603 paid June 30. Income StatementRevenues: Interest Income $50.1 Loan Fees (8% of new loans) 10.4Operating Revenue $60.5 Expenses: Interest Expense $50.6 Salaries and Wages 1.7 Other 0.6 Operating Expenses $52.9 Operating Income $ 7.6 Income Tax ? Net Income $ 7.6 Statement of retained earningsBeginning Retained Earnings $7.0 Plus: Net Income 7.6 Less: Dividends -7.0 Ending Retained Earnings $7.6 Ending Loans ReceivableLoanBeg. Bal. Loan FeesAccrued Int. Ending Bal.405 $28.6 $4.3 $32.9 506 36.0 3.6 39.6 601 76.9 10.0 86.9 604 96.9 9.7 106.6 605 45.6 6.4 52.0 New 130.0 $10.4 8.5 148.9Total Loans Receivable $466.9 Ending Loans ReceivableLoanBeg. Bal. Loan FeesAccrued Int. Ending Bal.405 $28.6 $4.3 $32.9 506 36.0 3.6 39.6 601 76.9 10.0 86.9 604 96.9 9.7 106.6 605 45.6 6.4 52.0 New 130.0 $10.4 8.5 148.9Total Loans Receivable $466.9 Balance SheetAssets: Cash $ 18.5 Loans Receivable 466.9Total Assets $485.4 Liabilities: Interest Payable $ 12.6 Term Deposits 465.0 Total Liabilities $477.6 Owners Equity: Common Stock $ 0.2 Retained Earnings 7.6 Total Liabilities and Equity $485.4