Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Gzel 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 . The seller of the machinery , Rich Machinery is located in Germany. Gzel Paketleme estimated through cash flow analysis that he could pay the cost of machinery only after 2 years. The supplier in Germany accepts to make this trade if he is fully secured through a bank guarantee provided by the buyers bank. Besides, he considers the option of converting these receivables into cash through his bank. They agreed that the transaction will be in the following way ; a time draft would be drawn by the seller to the buyer who is asked to accept the draft and then an aval would be provided by his bank who is, a well known intermational bank ,Ing Bank, ( credit rating as being A+ by S&P , one of the rating agencies in the world agencies ).The bank of Rich Machinery is Deutsche Bank , a well known international bank ( credit rating as being A+ by S&P , one of the rating agencies in the world agencies ). Pls . see which financial instrument or instruments would solve the needs of parties here . Pls. identify first the needs of the parties. What do they want ?How would it work ? And draw please

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Financial Institutions Management A Risk Management Approach

Authors: Anthony Saunders Professor, Marcia Millon Cornett, Otgo Erhemjamts

10th International Edition

1260571475, 9781260571479

More Books

Students also viewed these Finance questions