DEF Ltd. has imported goods to the extent of US$ 1 crore. The payment terms are 60
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Question:
DEF Ltd. has imported goods to the extent of US$ 1 crore. The payment terms are 60 days interest-free credit. For additional credit of 30 days, interest at the rate of 7.75% p.a. will be charged.
The banker of DEF Ltd. has offered a 30 days loan at the rate of 9.5% p.a. Their quote for the foreign exchange is as follows:_
Spot rate INR/US$ 62.50
60 days forward rate INR/US$ 63.15
90 days forward rate INR/US$ 63.45
Which one of the following options would be better?
1. Pay the supplier on 60th day and avail bank loan for 30 days.
2. Avail the supplier's offer of 90 days credit.
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