Part-2 of this problem

AFM

Sir I couldn't understand what they did in Option-2 solution. Why they charge 1 % of INR 10 Lakhs and 2 months Interest? Video Details ------------- Advanced Financial Management - AFM Foreign Exchange Exposure and Risk Management #98. Illustration # 53

G Chandrakanta

CA Final

★ 15K+

02-Apr-26 20:06

Answers (2)

LC charges are 2% pa. so for half year it will be 1% secondly LC charges are paid up front whereas rest of the payment is made at closure of LC. so in order to match all cashflows at same time, they computed FV of LC charges and took it to eventual payment date 180 days later

Sriram Somayajula

Admin

03-Apr-26 08:30

Thank you sir. Understood

Thread Starter

G Chandrakanta

CA Final

★ 15K+

03-Apr-26 11:07