TNAG-1648-FCO40-2295-Financial-insurance-and-investment-companies-in-Hong-Kong-In-1987 — Page 20

JUN.'11 '87 11:01 IMF WASH DC RAPICOM6300 477-7491

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ASSUMPTIONS FOR FINANCIAL PROJECTIONS

P.021

Annex i

Page 1 of 3

The principal assumptions used in preparing the base case financial forecasts are as follows:

1.

2.

Rate of New Investment by CIC: $8,000,000 per annum;

Average after Tax Cash Return on Investments:

0% p.a. in First year

10.0% p.a. in Second year

20.0% p.a. in Third year and thereafter;

3. Average Return on Short Term Investments:

4.

per annum ;

Average rate paid on borrowed funds (excluding Loan Notes): 10.0% p.a.i

5.

%. Non Performing Investments: 5% throughout;

6.

X Losses on Investments : 5% same as (5) above;

% "Carried Interest" to Actual Cash Investments: 50% (This would include fee income, profits from compensation trade,

etc.)¡ ̧

Salaries and Administrative Expenses of 1.5% and 0.75%, respectively, of average total investment (short term and project investments);