Walsh Inc. is a U.S. manufacturer of heavy construction equipment used in the construction of deep water ports and heavy lift capacity airports. Walsh is headquartered in Troy, Mi., and has just received an order from a Russian Construction Company not known to you or to Walsh. The order is for three of your largest locomotives with the total sale price of e30.0 million euros. The Pakistani company requires Walsh to ship upon complettion 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 Bankers Acceptance rates are 4.96% Issues to consider The Russian's cannot pay for 180 days from shipment Walsh wants it's money as soon as shipment is made What are the many different ways you can make money from this transaction without taking any undue risk How would you cover yourself for Russian risk What other risks do you have (financial and otherwise), explain how to mitigate Is the euro and the dollar at equilibrium? prove that it is or isn't How much would you make on the total transaction in dollar and vield terms Are there any possible investment instruments that can be created out of this transaction, is this also a revenue opportunity?, If so how much Assume no ancillary or incidental fees 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!) What international instrument can be used to ensure performance of both parties? Describe how it works and what parties are involved in this deal This question encompasses all the major issues we discussed during the semester, please ensure you consider all risk and financing issues in your answer Walsh Inc. is a U.S. manufacturer of heavy construction equipment used in the construction of deep water ports and heavy lift capacity airports. Walsh is headquartered in Troy, Mi., and has just received an order from a Russian Construction Company not known to you or to Walsh. The order is for three of your largest locomotives with the total sale price of e30.0 million euros. The Pakistani company requires Walsh to ship upon complettion 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 Bankers Acceptance rates are 4.96% Issues to consider The Russian's cannot pay for 180 days from shipment Walsh wants it's money as soon as shipment is made What are the many different ways you can make money from this transaction without taking any undue risk How would you cover yourself for Russian risk What other risks do you have (financial and otherwise), explain how to mitigate Is the euro and the dollar at equilibrium? prove that it is or isn't How much would you make on the total transaction in dollar and vield terms Are there any possible investment instruments that can be created out of this transaction, is this also a revenue opportunity?, If so how much Assume no ancillary or incidental fees 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!) What international instrument can be used to ensure performance of both parties? Describe how it works and what parties are involved in this deal This question encompasses all the major issues we discussed during the semester, please ensure you consider all risk and financing issues in your