Curtis Inc. is a U.S. manufacturer of heavy construction equipment used in the construction of deep water ports and heavy lift capacity airports. Curtis is headquartered in Michigan, and has just received an order from a Pakistani Construction Company not known to you or to Curtis. The order is for two of your largest earth movers with the total sale price of e30.0 million euros. The Pakistani company requires Curtis to ship upon completion of manufacture and will pay the e30.0 million to you six months from shipment. Global Financing (a Commercial Bank of which you are President and Chief Lender) is the international financier hired to put this financial transaction together and make it happen, (so don't make this a career limiting opportunity)!

Cost of funds is 4.75% (LIBOR) Confirmation fees are 65 basis points Negotiation fees are 12 basis points Discount Commission is 30 basis points Spot euro is $1.4950 90 day euro is $1.4975 180 day euro is $1.5000 Banker's Acceptance rates are 4.96%

Issues to consider: The Pakistani's cannot pay for 180 days from shipment Curtis wants it's money as soon as shipment is made

Assume no ancillary or incidental fees 1. How would you eliminate the foreign exchange risk, is there any? when?how?, explain and calculate All computations are in U.S. dollars ( you're in the U.S. remember!)

2. What international instrument can be used to ensure performance of both parties? Describe how it works and what parties are involved in this deal