There is a contract to export coal from New York USA to Tian

There is a contract to export coal from New York (USA) to Tianjin (China). We have: FOB New York = $2000/ton Freight (New York to Tianjin) = $200/ton Insurance plus-10% Premium rate = 5% Please calculate: (a) CFR Tianjin (b) CIF Tianjin-?

Solution

a). Solution :- CFR Tianjin = FOB New York + Freight + Insurance + Premium.

= 2000 + 200 + 10 % of (2000 + 200) + 5 % of [ 2000 + 200 + 10 % of (2000 + 200) ]

= 2000 + 200 + 10 % of 2200 + 5 % of [ 2000 + 200 + 10 % of 2200 ]

= 2000 + 200 + 220 + 5 % of (2000 + 200 + 220)

= 2000 + 200 + 220 + 5 % of 2420

= 2000 + 200 + 220 + 121

= $ 2541.

b). Solution :- CIF Tianjin = FOB New York + Freight + Insurance.

= 2000 + 200 + 10 % of 2200

= 2000 + 200 + 220

= $ 2420.

Conclusion :-

a). CFR Tianjin	$ 2541.
b). CIF Tianjin	$ 2420.