Question
A Russian company, Alpha Inc, opens a $500,000 time letter of credit with its bank Vaneshnicom Bank, in favor of the beneficiary in the United
A Russian company, Alpha Inc, opens a $500,000 time letter of credit with its bank Vaneshnicom Bank, in favor of the beneficiary in the United States, Servitech College. The time letter of credit calls for the draft to be drawn on Bank of America at 90 days after the bill of lading date. Since the draft is drawn on Bank of America, they are taking the credit risk of Vaneshnicom Bank.
The goods are shipped on April 14, Alpha present documents required under the letter of credit to B of A on April 20, accompanied by a 90-day draft maturing on July 13.
Commission is 1.5% p.a. that would be charged by B of A.
6.4% acceptance discount rate
Servitech College's line of credit borrowing rate is 9.5% (fyi).
Once the banker's acceptance has been created, the exporter has two choices: What are they? and please calculate
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