Allen, CFO of a microchip manufacturer company Nemco, Inc., was approached by a Japanese customer with a proposal to pay cash (in yen) for its typical orders of 25,500,000 every other month if it were given a 5% discount. The current terms are delayed payment after 30 days with no discounts. Using the following quotes and estimated cost of capital for the Japanese costumer, Jason will compare the proposal with covering yen payments with forward contracts. Spot rate : 112.5/$30-day forward rate : 111.5/$, Nemco WACC : 9.2% p.a. How much in U.S. dollars will Nemco, Inc receive with the discount and with no discount but fully covered with a forward contract? Should he accept the offer made by the Japanese customer? (use 360 days convention)

a. $217,459.61 with discount; $227,981.87 with no discount but fully covered with a forward. Yes, he must accept the offer because the cash offer provides higher proceed.

b. $209,893.23 with discount; $243,001.05 with no discount but fully covered with a forward. No, he must reject the offer because the cash offer provides lower proceed

c. $229,303.61 with discount; $203,224.07 with no discount but fully covered with a forward. Yes, he must accept the offer because the cash offer provides higher proceed

d. $215,333.33 with discount; $226,959.53 with no discount but fully covered with a forward. No, he must reject the offer because the cash offer provides lower proceed.