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