NewStats: 3,259,437 , 8,170,115 topics. Date: Sunday, 25 May 2025 at 01:37 AM 5k2z59

A friend is thinking of going into agribusiness.
He's offered a loan of N1.1m by his bank on the following
1. Tenure 35months i.e. 3years
2. Repayment: Monthly Basis
3. Repayment amount: N48,000 (on reducing balance method)
4. Total repayment 48,000 x 35 = 1,680,000
5. Banks interest: N580,000
The above holds baring any increase in interest rate

Investment options available
1. there's an oil palm plantation for lease at N1m for 10years period
It's estimated that there'll be a net cash inflow of N50,000 per month from sales of unprocessed fruits.

This implies that the business will roughly break even in 2years. While it will also pay the said loan

Option 2
Buy a land worth of same N1m and plant the oil palm.
It's expected to start fruiting in 5 years. From the 6th year, the expected cash inflow would be about N50,000 per month ( ceteris paribus)

Note: the loan is given against his salary so repayment is based on his salary and not from the business.

So folks which of the two investments can he go for. Urgent please.
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Re: Please Kindly Advise. Which Should He Go For? by DrDoc: 12:29pm
Neither. When he can get better deals on 5-6 months tenure. I offer far better returns on 6 months transactions

Those 2 options are not profitable

3. Repayment amount: N48,000 (on reducing balance method

N50,000 per month as profits.

N2k left as profits after sorting the bank interest without considering other things

psucc:
A friend is thinking of going into agribusiness.
He's offered a loan of N1.1m by his bank on the following
1. Tenure 35months i.e. 3years
2. Repayment: Monthly Basis
3. Repayment amount: N48,000 (on reducing balance method)
4. Total repayment 48,000 x 35 = 1,680,000
5. Banks interest: N580,000
The above holds baring any increase in interest rate

Investment options available
1. there's an oil palm plantation for lease at N1m for 10years period
It's estimated that there'll be a net cash inflow of N50,000 per month from sales of unprocessed fruits.

This implies that the business will roughly break even in 2years. While it will also pay the said loan

Option 2
Buy a land worth of same N1m and plant the oil palm.
It's expected to start fruiting in 5 years. From the 6th year, the expected cash inflow would be about N50,000 per month ( ceteris paribus)

Note: the loan is given against his salary so repayment is based on his salary and not from the business.

So folks which of the two investments can he go for. Urgent please.
(Modify) (Quote) (Report) (Share)

Re: Please Kindly Advise. Which Should He Go For? by DrDoc: 12:29pm
Neither. When he can get better deals on 5-6 months tenure. I offer far better returns on 6 months transactions

Option 2 seems to make long term sense.
But, I will advise he also adds a cash crop like cassava, maize or vegetables that can bring in quick cashflow.

Option 1.

I will explain later

Please I am eagerly waiting

ImmaculateJOE:
Option 1.

I will explain later

The 50k is net, after paying all necessary expenses during harvest. And of course it will be able to sort the loan after 3years (50,000 x 35months = 1,750)
So the next 7 years is for profit.

helinues:
Those 2 options are not profitable



N50,000 per month as profits.

N2k left as profits after sorting the bank interest without considering other things