Coldcase Appliances manufactures houschold refrigerators and freczers in Mexico, Spain, and California. Each affiliate has monthly unsettled balances due to or from other affiliates. At the end of March, unsettied intracompany debts in U.S dollars were:

a. How should Coldcase net these intracompany debts? How much would be saved in transaction expenses over the no-netting alternative?

b. Before settling the above accounts, Coldcase decides to invest \(\$ 6,000,000\) of parent funds in a new hard-disk-drive plant in a new Free Industrial Zone in Penang, Malaysia. How can this decision be incorporated into the sertiement process? What would be total bank charges? Explain.

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Coldcase, Mexico: Owes $8 million to Spanish affiliate. Owes $9 million to California parent. Coldcase, Spain: Owes $5 million to Mexican affiliate. Owes $6 million to California parent. Coldcase, California: Owes $4 million to Mexican affiliate. Foreign exchange transaction spreads average 0.3% of funds transferred.