XYZ Ltd. It is planning to import a multi-purpose machine from Japan at a cost of...

XYZ Ltd. It is planning to import a multi-purpose machine from Japan at a cost of 3400 lakhs yen. The company can avail loan at 18% interest per annum compounded quarterly with which it can import the machine. However, there is an offer from the Tokyo branch of an India based bank extending credit of 180 days at 2% per annum against the opening of an irrevocable letter of credit. Other information: -

Present exchange rate Rs. 100 = 340 yen

180 days forward rate Rs. 100 = 345 yen

Commission charges for a letter of credit at 2% per 12 months.

Advise whether the offer from the foreign branch should be accepted?

The answer should be a min of 700 words with complete theory and calculation part

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

XYZ Ltd., is in the business of manufacturing of steel utensils. The firm is planning to...

XYZ Ltd., is in the business of manufacturing of steel utensils. The firm is planning to diversify and add a new product line. The firm either can buy the required machinery or get it on lease. The machine can be purchased for Rs. 15,00,000. It is expected to have a useful life of 5 years with a salvage value of Rs. 1,00,000 after the expiry of 5 years and depreciation on straight line basis. The purchase can be financed by...

On 1 July 2022, Monkey Ltd leased a plastic‐moulding machine from Wise Ltd. The machine cost...

On 1 July 2022, Monkey Ltd leased a plastic‐moulding machine from Wise Ltd. The machine cost Wise Ltd $65 000 to manufacture and had a fair value of $77 055 on 1 July 2022. The lease agreement contained the following provisions. Lease term 4 years Annual rental payment, in advance on 1 July each year $20 750 Residual value at end of the lease term $7 500 Residual guaranteed by lessee Nil Interest rate implicit in lease 8% The lease...

XYZ Pty Ltd acquired a machine for $400,000 on 1 September 2017. The machine has an...

XYZ Pty Ltd acquired a machine for $400,000 on 1 September 2017. The machine has an estimated useful life of 5 years. The machine was sold on 1 May 2020 for $150,000. Required: A. Prepare the depreciation schedule using the prime cost method B. Prepare the depreciation schedule using the diminishing value method C. Calculate the assessable or deductible balancing adjustment under the prime cost method D. Calculate the assessable or deductible balance adjustment under the diminishing value method.

Toyo Japan plant manufactures three product lines, all multi-purpose kitchenware. The plant’s three product models are...

Toyo Japan plant manufactures three product lines, all multi-purpose kitchenware. The plant’s three product models are the Product 1 (P1), the Product 2(P2), and the Product 3 (P3). Until recently, the plant used a job-order product-costing system, with manufacturing overhead applied on the basis of direct-labor hours. The following table displays the basic data upon which the traditional costing system was based. Planned annual production P1 P2 P3 Volume in units 5,000 4,000 1,000 Production runs 40 runs of 125...

Company XYZ is considering investing in a new machine that will cost $15,000. The machine will...

Company XYZ is considering investing in a new machine that will cost $15,000. The machine will allow the firm to generate sales of $50,000 per year. The machine will have a life of 3 years. The operating expenses of XYZ are projected to be 70% of total sales. The machine will be depreciated on a straight-line basis to a zero salvage value. The market value of the machine in three years is estimated to be $5,000. The marginal tax rate...

5 years ago, a multi-axis NC machine was purchased for the express purpose of machining large,...

5 years ago, a multi-axis NC machine was purchased for the express purpose of machining large, complex parts used in commercial and military aircraft worldwide. It cost $350,000, had an estimated life of 15 years, and O&M costs of $50,000 per year. It was originally thought to have a salvage value of $20,000 at the end of 15 years but is now believed to have a remaining life of 5 years with no salvage value at that time. With business...

XYZ purchased a machine 5 years ago at a cost of $95,000. The machine had an...

XYZ purchased a machine 5 years ago at a cost of $95,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $9,500 per year. If the machine is not replaced, it can be sold for $11,000 at the end of its useful life. A new machine can be purchased for $170,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by...

XYZ corp. is considering investing in a new machine. The new machine cost will $ 8,000...

XYZ corp. is considering investing in a new machine. The new machine cost will $ 8,000 installed. Depreciation expense on the new machine will be $ 1,200 per year for the next five years. At the end of the fifth year XYZ expects to sell the machine for $3000. XYZ will also sell its old machine today that has a book value of $4000 for $4000. The old machine has depreciation expense of $800 per year and zero salvage value....

Norwest is planning on purchasing a welding machine. The expected cost of this machine is $60,000,...

Norwest is planning on purchasing a welding machine. The expected cost of this machine is $60,000, and it is expected to have a useful life of 7 years with an estimated salvage value of $4,000. The machine is expected to produce cash savings of $20,000 per year in reduced labor costs and the cash operating costs to run this machine are estimated to be $6,000 per year. Assuming Norwest is in the 34% tax bracket and has a minimum desired...

On 1 July 2019, XYZ Ltd leased a machinery from ABC Ltd to be used to...

On 1 July 2019, XYZ Ltd leased a machinery from ABC Ltd to be used to be used in the mining operations. The machinery cost XYZ Ltd $120 307, considered to be its fair value on that same day. The capital/finance lease agreement contained the following provisions: The lease term is for 3 years, commencing on 1st July 2019 The lease is cancellable and with a 10 % charge of the leased asset’s fair value from the lessor Annual lease...

Subjects