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finance course b) Azar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic services, has ordered 50 ophthalmic testing machines
finance course
b) Azar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic services, has ordered 50 ophthalmic testing machines from a German supplier at a price of Euro 7,500 each. The supplier will deliver the machines during the coming month, but Azar Plc has agreed with the supplier that it will not have to pay for the machines until Azar Plc has installed them and been paid by its customers, so it has negotiated payment in three months' time. Azar Plc has an arrangement with its banks whereby it can borrow to cover short-term cash shortages at 2.0% above base rate, and can invest surplus funds at 0.25% below base rate, in both the UK and Germany. Current exchange rates Euro/ Spot 3 months forward Current base rates Germany UK 1.1415 - 1.1424 1.1365 - 1.1385 1.0% 0.5% Using the information above, do calculations to evaluate three ways in which Azar Plc take action to reduce or remove the risks associated with its foreign exchange exposure b) Azar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic services, has ordered 50 ophthalmic testing machines from a German supplier at a price of Euro 7,500 each. The supplier will deliver the machines during the coming month, but Azar Plc has agreed with the supplier that it will not have to pay for the machines until Azar Plc has installed them and been paid by its customers, so it has negotiated payment in three months' time. Azar Plc has an arrangement with its banks whereby it can borrow to cover short-term cash shortages at 2.0% above base rate, and can invest surplus funds at 0.25% below base rate, in both the UK and Germany. Current exchange rates Euro/ Spot 3 months forward Current base rates Germany UK 1.1415 - 1.1424 1.1365 - 1.1385 1.0% 0.5% Using the information above, do calculations to evaluate three ways in which Azar Plc take action to reduce or remove the risks associated with its foreign exchange exposure b) Azar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic services, has ordered 50 ophthalmic testing machines from a German supplier at a price of Euro 7,500 each. The supplier will deliver the machines during the coming month, but Azar Plc has agreed with the supplier that it will not have to pay for the machines until Azar Plc has installed them and been paid by its customers, so it has negotiated payment in three months' time. Azar Plc has an arrangement with its banks whereby it can borrow to cover short-term cash shortages at 2.0% above base rate, and can invest surplus funds at 0.25% below base rate, in both the UK and Germany. Current exchange rates Euro/ Spot 3 months forward Current base rates Germany UK 1.1415 - 1.1424 1.1365 - 1.1385 1.0% 0.5% Using the information above, do calculations to evaluate three ways in which Azar Plc take action to reduce or remove the risks associated with its foreign exchange exposure b) Azar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic services, has ordered 50 ophthalmic testing machines from a German supplier at a price of Euro 7,500 each. The supplier will deliver the machines during the coming month, but Azar Plc has agreed with the supplier that it will not have to pay for the machines until Azar Plc has installed them and been paid by its customers, so it has negotiated payment in three months' time. Azar Plc has an arrangement with its banks whereby it can borrow to cover short-term cash shortages at 2.0% above base rate, and can invest surplus funds at 0.25% below base rate, in both the UK and Germany. Current exchange rates Euro/ Spot 3 months forward Current base rates Germany UK 1.1415 - 1.1424 1.1365 - 1.1385 1.0% 0.5% Using the information above, do calculations to evaluate three ways in which Azar Plc take action to reduce or remove the risks associated with its foreign exchange exposureStep by Step Solution
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