A co. import an equipment from japan at a cost of 3,400 lakh yens. The...
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A co. import an equipment from japan at a cost of 3,400 lakh yens. The company may avail loans at 18% p.a. interest with quarterly rests with which it can import the said equipment. The company has also an offer from bank extending credit of 180 days at 2% p.a. against opening of an irrevocable letter of credit (L/C). Additional information: Present Exchange Rate $100 = 340 yen 180 days forward rate $100 = 345 yen Commission charges for L/C at 2% per 12 months. Advice whether the company should accept the offer
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