Q50010 BC Export Co are holding an Export bill in United States Dollar (USD)

BC Export Co are holding an Export bill in United States Dollar (USD) 1,00,000 due 60 days hence. Rate at which deal was finalized @ Rs.47.50 per USD. The Company is worried about the fluctuating exchange rate. The Firm’s Bankers have agreed to make advance against the bill after deduction of interest 9% per annum and also quoted a 60- day forward rate of Rs.48.10. The cost of capital for the exporter is 15% p.a. Advise whether the exporter will agree to the banker’s offer.

  Solution

21 7 Capture 5

Hence the exporter should agree to the offer of his banker.

Also study these questions

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