QUESTION 2 Oluwaseun Agro-Allied Limited (OAL) is a private limited liability company incorporated in Lagos, Nigeria. The company processes and exports cassava starch and earns revenues partly in USD. OAL is currently wholly financed by equity contributed by its three founding shareholders. The Managing Director, Mrs. Aduke Fashola, is exploring external sources of finance to fund a N1.2 billion expansion of its processing factory. A financial consultant has presented the following options to the Board: Option A – Bank Overdraft from Zenith Bank Plc at prime lending rate plus 5% (current prime rate: 13%) Option B – Lease financing for equipment valued at N400 million from a finance house, with annual lease payments of N95 million for five years Option C – Venture Capital (VC) injection of N600 million from a private equity firm in exchange for a 35% equity stake in OAL Option D – Development Finance from the Bank of Industry (BOI) at a concessionary rate of 9% per annum for ten years Required: (a) Distinguish between SHORT-TERM and LONG-TERM sources of finance, and classify each of the four options (A–D) above accordingly. (6 marks) (b) Compute the total lease payments under Option B and determine the finance cost of the lease arrangement. (4 marks) (c) Explain FOUR characteristics of Venture Capital as a source of finance, using Option C to illustrate your answer. (8 marks) (d) State TWO reasons why Option D (BOI Development Finance) may be the most suitable source of finance for OAL's expansion. (2 marks) Total: 20 marks