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KOKOLI Pharmacy Limited supplies goods to Federal government hospitals in the Northern part of Nigeria. This is a standing contract with the Federal Ministry of Health. The Managing Director, Mr$.$ KOKOLI Okonma, is a close relation of a former minister of state for Health. He is assured of the continuity of the supplies contract in spite of the changes in the headship of the ministry. KOKOLI Pharmacy imports the goods from a U$.$K$.$ firm through confirmed back$-$to$-$back letter of credit. The ultimate manufacturers are in India. The transactions have been handled previously by a first generation bank. They are not satisfied with the international operational procedures of that Bank. Following your persistent pressure on the director of the company, he has agreed to transfer the business to your bank. Goods worth N$100$million is supplied monthly to the hospitals and payments are made by the Ministry two months from the date the delivery notes and invoices are acknowledged. Total cost of delivering the goods to the hospitals $($including import value, freight and local transportation$)$ averages N$65$million per consignment. Required: a$.$ A description of the appropriate loan structure suitable for this transaction. b$.$ A description of the transaction dynamics if your bank agrees to grant the credit. c$.$ How should the bank secure itself? d$.$ Assume that the Bank$$s Prime Lending Rate is $15$percent and you agree the lending rate at PLR $+7\%.$ Other charges are a maximum of $1\%$ of the facility amount payable upfront from the date of drawdown. Calculate the estimated net profit before interest and tax; and net profit before tax.

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