An Indian importer has to settle an import bill for $ 1,30,000. The exporters has given the
Fantastic news! We've Found the answer you've been seeking!
Question:
An Indian importer has to settle an import bill for $ 1,30,000. The exporters has given the Indian importer two options:
i) Pay immediately without any interest charges.
ii) Pay after three months with interest at 5 percent per annum.
The importer's bank charges 15 percent per annum on overdrafts. The exchanges rates in the market are as follows:
Spot rate ('/$) :48.35/48.36
3-Months forward rate (7$) :48.81/48.83
The importer seeks your advice. Give your advice.
Expert Answer:
Heres my advice for the Indian importer considering the two options and the currency exchange rates Option Analysis Option 1 Pay Immediately Benefit N... View the full answer
Posted Date:
