Question

BioTron​ Medical, Inc. Brent​ Bush, CFO of a medical device​ distributor, BioTron​ Medical, Inc., was approached by a Japanese​ customer, Numata, with a proposal to pay cash​ (in yen) for its typical orders of ¥13,100,100 every other month if it were given a 3.7​%discount.​ Numata's current terms are 30 days with no discounts. Using the quotes and estimated cost of capital for BioTron Medical in the popup​ window, Bush will compare the proposal with covering yen payments with forward contracts. Should Brent Bush accept​ Numata's proposal? Assume a​ 360-day financial year.

How much in U.S. dollars will BioTron Medical receive with the​ discount?

​$__  ​(Round to the nearest​ cent.)

How much in U.S. dollars will BioTron Medical receive with no discount but fully covered with a forward​ contract?

​$__  ​(Round to the nearest​ cent.)

Should Brent Bush accept​ Numata's proposal? (yes, no)

Data table

Spot​ rate:	​¥110.73/$
​30-day forward​ rate:	​¥109.33/$
​90-day forward​ rate:	​¥108.53/$
​180-day forward​ rate:	​¥107.13/$
​Numata's WACC	8.88​%
​BioTron's WACC	9.27%

Answer 1

Calculation for each part is given below