A company in Philadelphia purchases machinery from a Canadian company for USD 150 and receives one-year trade
Question:
A company in Philadelphia purchases machinery from a Canadian company for USD 150 and receives one-year trade credit. The machinery is transported to Philadelphia by a Canadian trucking company that charges the US Company USD 10. The US Company insures the shipment with a US insurance company and pays a premium of USD 3. After delivering the machinery to Philadelphia, the Canadian truck continues its trip to Houston, where it picks up microcomputers sold by a Texan company to a Mexican company. This shipment, which is worth USD 170, is insured by a US insurance company for a premium of USD 4. No trade credit is given to the Mexican company. Compute the BOP for the US and assume that Canadian and Mexican companies maintain dollar deposits in New York.
Step by Step Answer:
International Finance Putting Theory Into Practice
ISBN: 978-0691136677
1st edition
Authors: Piet Sercu