A German firm has sold some equipment to a firm in the U.S. The cost to the
Question:
A German firm has sold some equipment to a firm in the U.S. The cost to the U.S. firm is 20 million euros and the current dollar/euro exchange rate is $1.10 = € 1. Explain, and illustrate with "T-accounts", how the 20 million euro payment is actually made to the German firm (be sure to accurately identify the various parties to the transaction).
b. Given the information below, how much could a firm save if it instructed its three divisions to use a single account at one bank (a centralized depository) rather than three accounts at the same or three different banks?
Assume that the firm wants to make sure that 95% of the time no division runs an overdraft for its daily cash use. Why does this work?
Managerial Economics And Strategy
ISBN: 9780134899701
3rd Edition
Authors: Jeffrey M. Perloff, James A. Brander