Question
3. Motoguzzie (A). Motoguzzie exports large-engine motorcycles (greater than 700cc) to Australia and invoices its customers in US dollars. Sydney Wholesale Imports has purchased $3,000,000
3.
Motoguzzie (A). Motoguzzie exports large-engine motorcycles (greater than 700cc) to Australia and invoices its customers in US dollars. Sydney Wholesale Imports has purchased $3,000,000 of merchandise from Motoguzzie, with payment due in six months. The payment will be made with a bankers acceptance issued by Charter Bank of Sydney at a fee of 1.75% per annum. Motoguzzie has a weighted average cost of capital of 10%. If Motoguzzie holds this acceptance to maturity, what is its annualized percentage all in cost?
4.
Motoguzzie (B). Assuming the facts in problem 1, Bank of America is now willing to buy Motoguzzies bankers acceptance for a discount of 6% annum. What would be Motoguzzies annualized percentage all in cost of financing it $3,000,000 Australian receivable?
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Applied Conic Finance
Authors: Dilip Madan, Wim Schoutens
1st Edition
1107151694, 978-1107151697
