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Involvement of Bank and Foreign Trade - Assignment Example

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The objective of this paper is to identify the role of the banks in case of global trade. At the same time, the study has also identified the risk involved in the case of foreign trade. In this regard, the case of USASuperCars provides an adequate understanding of exchange rate risks…
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Involvement of Bank and Foreign Trade
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Download file to see previous pages In this assignment, selling prices of the USASuperCars has been given below along with the name of the countries. Thus, the aim of this assignment is to identify the consequences according to the situation given in the case. At the same time, involvement and occurrences of a bank in case of foreign trade have been demonstrated through the study. In order to identify the probability of exceeding the revenue $ 2,200,000, it can be ascertained that if the company USASuperCars will incur loss approximately around (17%) due to foreign exchange and for other reasons such as distribution purpose, even then the company will definitely be able to ensure a revenue approximately $2,200,000 or more. Rationally, the cost of cars is found to be recorded as $2207607.45, which signifies that during the global trade if the company will perform their trade operation with a loss of 17%, instead of that the company will able to earn revenue around at least $ 2,200,000. Thus, it can be claimed that the probability is high of exceeding the revenue level of $2,200,000 (Niepmann & Schmidt-Eisenlohr, 2014; Economy watch, 2010). In order to identify the probability of exceeding the revenue $2,225,000, it can be claimed that if the company USASuperCars will incur loss approximately around (15%) due to foreign exchange and other reasons that include distribution purpose, then the company will be able to ensure revenue of approximately $2,225,000 or more. In this regard, rationally the cost of cars is $2659767.84. In this regard, if the company will incur a loss of $484,767 even then the company can witness at least $2,225,000 in revenue. Thus, it can be claimed that the probability is very high at exceeding the revenue level of $2,225,000 (Niepmann & Schmidt-Eisenlohr, 2014; Economy watch, 2010). In order to identify the probability of not exceeding the revenue $2,160,000, it can be identified that if the company USASuperCars may incur loss approximately around (18% - 20%) due to foreign exchange and distribution purpose among others, then revenue of approximately $2,160,000 or more. ...Download file to see next pagesRead More
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