ssignment 6 interffiliate transactionsaggregeting and nettin

ssignment 6 inter-ffiliate transactions-aggregeting and netting - Protected View- Saved to this PC Layout References Mailings Review View Add-ins Help Tell me A company has affiliates in seven countries. Each affiliate enters into transactions with the other affiliates in the course of business. The company has determined that on average a remit for international funds transfer, costs in each affiliate to process the payment/receipt, and average cost to exchange currency) Except for this cost, the information for each question is specific to that question. tance from one affiliate to another costs $30. (This cost includes bank fees 1. In one quarter, the US affiliate made 28 purchases from the Japan alffliate and the Japan affiliate made 10 purchases from the US affiliate. a. What is the total transaction costs of payments if each affiliate pays each invoice separately? b. What is the total transaction costs of payments if the US affliate aggregates al amounts due to the Japan affiliate and makes a single payment covering the total due on all 28 invoices and the Japan affiliate aggregates all amounts due to the US affiliate and makes a single payment covering the total due on all 10 invoices? 2a. If each of the seven affiliates averages 16 purchases from each of the other affiliates during a quarter, what is the total transaction costs for payments if each affiliate pays each invoice separately? b. What is the total transaction costs for payments if each affiliate aggregates all amounts due for the quarter and makes a single payment to each other affiliate covering that total? Payment netting The following table indicates the aggregate quarterly invoices (in USS) between each affiliated company for a recent quarter Payee (thousands) Australia Belsium Germany UK US Australia 211 9217 139 78 93 228 99170 298 272 294 65 220 6 296 186 160 94 238 70 260 Germany 298 190 240 47 86281 95 UK 247

Solution

1) The cost for the US affiliate will be = $30*28 = $840

The cost for the japanese affiliate will be = $30*10 = $300.

2) The cost for US WILL BE $30

The cost for Japan will be $30. Since all tranactions are being procesed at the same time, so only once the charge will be incurred.

3) If each of the 7 affiliates make 16 purchases from one another, then each one will have to make a payment of $30 for each transaction, so the total payment will be = $30*16*6 = $2880. This amount each country will have to pay.

4) If all the transactions are covered on a single charge , then each country will pay = $30*6 = $480.

If we are to find the total value for all the countries, then it will be multiplied by 6 countries

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