3. How would your answer to question 2 change if the terms of sale were FOB vessel (FOB) or ex dock

(DEQ)? This company, located in Seattle, Washington, in the United States, is a distributor of engineering equipment and machine tools. The company receives an order from the Matens Company in Portugal for 10 light earth-moving machines. Since the company does not normally carry this number in stock, the export manager, Mr Green, places an option on 10 machines with the CPPC Manufacturing Company in Akron, Ohio, and requests a firm price quotation to be held in force for 90 days. The CPPC Company agrees to this and quotes a price of US$4500 ex warehouse, Akron, Ohio, for each machine.

Mr Green checks with his traffic manager and is told that railroad freight from Akron to Seattle for these machines will average approximately US$750 per machine.