On September 1 st , Shiru, a customer has just notified her bank that she has entered
Question:
On September 1st, Shiru, a customer has just notified her bank that she has entered into a contract to buy 20,000 air cleaners from UK at 2 each CIF Mombasa and that the payment will be made immediately. She also signed a contract to sell the air cleaners to a Zambian buyer for USD 75,000 for settlement during November.
Shiru instructs his bank to pay the Sterling immediately by SWIFT and to buy the dollars forward. On September 1st, the rates for Sterling and USD are as follows
GBPUSD
SPOT143.7833-144.188979.2778-79.4778
One month forward0.09-0.03 disc0.150-0.05 disc
Two months forward0.14-0.08 disc0.45-0.35 disc
Three months forward0.35-0.25 disc0.75-0.65 disc
The bank's SWIFT commission charged is 1/8%
The exchange commission charged is % with a maximum of KSH 5000.
REQUIRED
Determine the amount that will be debited and credited to Rose's account (20 Marks)
Expert Answer:
