BSI has sold to Cambodia’s Angkor Wat Entertainment Inc.(CAWE) INR 10 million licensing rights to 10 of its recent films. Payment is due in six months. BSI can simply finance its exports by drawing on its credit line from the State Bank of India at the rate of 12 percent and purchase export credit insurance from the Ex-Im Bank of India at the cost of 175 basis points.

a. What is/are the risk(s) faced by Bollywood Studio of India?

b. What is the annualized percentage all-in cost of this method?

c. Outline alternative export financing methods that BSI could consider. How do they mitigate the different risks faced by BSI?