You are part of your company's financial advisory team and they ask you to prepare a report

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Question:

You are part of your company's financial advisory team and they ask you to prepare a report to import from a South Korean supplier, who has been in the market for several years, but with whom no operations have been carried out before, for which it is It is essential to set up a form that allows you to know the import costs. Using the Beaumol model, it has been concluded that the optimal order size should be 65,825 units, for an item with an ex-factory unit price of 20 South Korean won (consider that the parity between currencies is USD$1-1 South Korean won During all the process). The foreign supplier will be canceled within 180 days from the invoice and the national logistics expenses will be paid to whoever corresponds. The data of the purchase operation in dollars; They are at the exchange rate observed by the seller at the time of cancellation is $877 in the case:

1- A special packaging must be incorporated whose cost is 2.5 South Korean won per item.

2- The local freight to the port is USD$2,750 and the local insurance is 0.07%, respectively, of the EXWORK value.

3- Stowage costs in port and placement on board amount to US$1,710.

4- The shipping freight is US$16,500.

5- International insurance is for 0.275% of the FOB value.

The data of the hospitalization operation to be paid in Chilean pesos, must be calculated based on a customs dollar of $870 are:

1- The customs duty is 1.28% on CIF because it is a product with a trade agreement that has a tariff reduction and VAT 19% is paid on CIF + Tariff.

2- Freight and stowage to the buyer's warehouse US$ 3,920 (subject to VAT).

3- Customs/warehouse transport insurance 0.091% of the CIF value.

4- Customs agency services 0.85% of the CIF value (subject to VAT). Prepare a technical report, considering that in its development you must follow the instructions and answer the following questions:

a) Calculate the cost of the operation (Value of the merchandise) in dollars for the clauses: EX WORK, FAS, FOB and CIF.

b) Explain why you have to buy 65,825 units.

c) Need for cash in pesos, which are outside of a letter of credit, to: clear customs and take to warehouses (Tariff + Customs Agent + Local Insurance + Local Freight + VAT).

d) Recommend the form of payment for the import, giving the corresponding arguments.

e) Explain how this form of payment works and what must be done to apply the recommendation.