Customer: Customer is in Sweden and wants to buy 100 of your sail boats. They want to buy these boats on 0 pen Terms at 90 days, but are willing to pay on net 30 for a 1% discount. The value of each boat is $5,000. It will take 2 weeks to ship the products to Sweden from Canada's manufacturing plant. Operations: It takes 5 weeks to build the boats if you work with supplier from America. If you opt to go for cheaper components and buy from supplier in China it will take you 6 weeks. Production costs $150 per week for each boat built. Suppliers: In order to build these boats you have two suppliers who work with you. Supplier A sells you a critical component (the engines) for $500 per component. They want cash in advance, but are willing to offer you open terms on net 60 if you pay an additional 2% for the total cost of the order. They are located in Canada, and take 4 weeks to ship to you. Supplier B from America sells you a non-critical component (fabric to make the sails) and is located in USA. They are willing to sell to you on open terms net 90 and charge $600 per component. They will take 2 weeks to ship to you. As an alternative to Supplier B from America you could choose to work with the Chinese supplier. They will sell to you components at $475 per component, but require payment by an LC. They will take 6 weeks to ship to you. Financial information: - You can borrow at 10% interest rate on your line of credit - FX forwards are issued at 1.5% of the contract value - Issuing an LC costs 1% - Confirming an LC costs 3\% - ARI costs 0.50% for Sweden, 0.75% for Italy Equipment: In order to produce these boats you will need some new equipment. You can buy this equipment for $200,000 and can pay cash up-front, or finance it over 5-years with interest at 7%. The payments will be straight-line payments with the full value being paid out by the end of year 5. You can also lease the equipment - the residual value will be $140,000 after 5 -years. The lease rates are at 12%, and are paid straight-line. Customer: Customer is in Sweden and wants to buy 100 of your sail boats. They want to buy these boats on 0 pen Terms at 90 days, but are willing to pay on net 30 for a 1% discount. The value of each boat is $5,000. It will take 2 weeks to ship the products to Sweden from Canada's manufacturing plant. Operations: It takes 5 weeks to build the boats if you work with supplier from America. If you opt to go for cheaper components and buy from supplier in China it will take you 6 weeks. Production costs $150 per week for each boat built. Suppliers: In order to build these boats you have two suppliers who work with you. Supplier A sells you a critical component (the engines) for $500 per component. They want cash in advance, but are willing to offer you open terms on net 60 if you pay an additional 2% for the total cost of the order. They are located in Canada, and take 4 weeks to ship to you. Supplier B from America sells you a non-critical component (fabric to make the sails) and is located in USA. They are willing to sell to you on open terms net 90 and charge $600 per component. They will take 2 weeks to ship to you. As an alternative to Supplier B from America you could choose to work with the Chinese supplier. They will sell to you components at $475 per component, but require payment by an LC. They will take 6 weeks to ship to you. Financial information: - You can borrow at 10% interest rate on your line of credit - FX forwards are issued at 1.5% of the contract value - Issuing an LC costs 1% - Confirming an LC costs 3\% - ARI costs 0.50% for Sweden, 0.75% for Italy Equipment: In order to produce these boats you will need some new equipment. You can buy this equipment for $200,000 and can pay cash up-front, or finance it over 5-years with interest at 7%. The payments will be straight-line payments with the full value being paid out by the end of year 5. You can also lease the equipment - the residual value will be $140,000 after 5 -years. The lease rates are at 12%, and are paid straight-line