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Amount of payment received by arrora sdn bhd

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Arrora Sdn Bhd has received an order to export their beauty skin serum to New York under the terms of a letter of credit (L/C) and the said L/C must be issued by NKTB Bank on behalf of the importer, TrueLife Ltd. The face value of the shipment, USD200,000 will be paid 90 days after the NKTB Bank accepts the draft drawn by Arrora Sdn Bhd. The current discount rate is 8.0% per annum and 90 days acceptance fee of 0.37%. In addition, there is a flat rate of commission equal to 0.5% of the face amount. The spot rate and 90 days forward rate is MYR4.0900/4.0910/USD and MYR4.0922/4.0932/USD respectively.

i) Determine the amount of payment received by Arrora Sdn Bhd in MYR if it holds the acceptance until maturity.

ii) Determine the amount of payment received by Arrora Sdn Bhd in MYR if it sells the acceptance at once.

iii) If the opportunity cost of funds for Arrora Sdn Bhd is 10 percent per annum, give your suggestion to the corporation to maximize its earnings in MYR.

Reference no: EM133206134

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