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3. The profit generated by the subsidiary in the U.K. is considered as a good source of money to be used to pay for the
3. The profit generated by the subsidiary in the U.K. is considered as a good source of money to be used to pay for the import of manufacturing equipment from Japan for the new company in Fiji to locally manufacture its ingredients. The CEO has already entered into negotiations with the Japan supplier of the equipment. The supplier is willing to provide Nestle 3 years to pay for the equipment that will be shipped to Fiji, but the payments must be conducted with quarterly instalments of 5,250,000 Yen by the U.K. subsidiary. This is why the CEO wants you to construct a currency swap arrangement where the profits of the U.K. subsidiary can be used to pay for the equipment. (you are not required to provide the calculation) Explain to the CEO what forfaiting is, why it is possible that forfaiting of the transaction can occur and the implication that it will have on the swap transaction
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