Gzel Paketleme is located in Turkey . The company is considering to purchase some machinery worth of 1 Million USD . The machinery will be

“Güzel Paketleme” is located in Turkey . The company is  considering  to  purchase  some  machinery  worth of  1  Million USD .  The machinery will be used   to produce  some  special packaging materials  that will be  exported to some prospect   customers  in Dubai.   The company will be   exporting 1 Million USD worth of goods  to these  buyers . Credit terms will be 1 year .  The payment method will be  O/A  since these buyers only accept to buy goods  if the payment method is  this.    The seller of  the machinery  , “Rich Machinery” is located in Germany.   “Güzel Paketleme” estimated through his cash flow analysis that  he could pay the  cost of machinery only  after 1 year .  The  supplier  in Germany  would accept to sell  this machinery   if he is  fully secured through a bank guarantee .  Besides,  he wants to use the option of having funds  from his  bank  by  converting this receivables  into cash.  They  agreed that the transaction would be arranged in the following way ;    a time  draft  would  be drawn by the seller to the buyer who would accept the draft   and then an aval would  be provided by his bank  who is  a  well known  international bank ,“Ing Bank”. (  credit rating as being A+ by S&P , one of the rating agencies in the world  ) The bank of “ Rich Electronics”  is “Deutsche Bank” ,a full service international bank. 

a) Pls. find out  what could  be the most appropriate   trade finance instrument for the  parties ( between “Rich Machinery” and “Güzel Paketleme” )  to conduct this trade effectively ?  Pls , draw and explain in steps  how  would  that work ? 

b) Pls refer to your  answer in a part , what is the risk “ Rich Machinery” does not want to take in this trade ? To whom is this risk transferred ? What is the role of the bank that gives  aval ?  ( Pls. consider the  trade finance method  you choose  in part a) 

c) What is the risk “Güzel Paketleme” would be  taking in this  trade, considering his exports to these new prospect companies  ? How could  he protect himself  for this risk ? Pls.  explain only  by using only one  trade finance  instrument that would help him to secure  his trade.