Should the company pursue international sales further

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Reference no: EM13297755

Larissa Warren, the owner of East Coast Yachts, has been in discussions with a yacht dealer in Monaco about selling the company's yachts in Europe. Jarek Jachowicz, the dealer, wants to add East Coast Yacht's to his current retail line. Jarek has told Larissa that he feels the retail sales will be approximately 5 Million euros per month. All sales will be made in Euros, and Jarek will retain 5% of the retail sales as commission, which will be paid in euros. Since the yachts will be customized to order, the first sales will take place in one month. Jarek will pay East Coast Yachts for the order 90 after it is filled. This payment schedule will continue for the length of the contract between the two companies. Larissa is confident the company can handle the extra volume with its existing facilities, but she is unsure about any potential financial risk of selling its yachts in Europe. In her discussion with Jarek, she found the current exchange rate is $.73/euro. At the exchange rate, the company would spend 70% of the sales income on production cost. This number does not reflect the sales commission to be paid to Jarek. Taking all factors into account, should the company pursue international sales further? Why or Why not?

Reference no: EM13297755

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