Task C/D — comparison and ranking
| Payment term | Gross (USD) | Net nominal | PV @12% | All-in cost | Default p | Rank PV | Rank risk | Verdict |
|---|---|---|---|---|---|---|---|---|
| Advance payment (100%) — 5% concession | 570,000 | 569,900 | 569,900 | 5.02% | 0.0% | 2 | 1 | Runner-up · only wins if concession < 3.36% |
| Confirmed LC at sight | 600,000 | 591,330 | 579,735 | 3.38% | 0.2% | 1 | 2 | RECOMMENDED |
| Usance LC 90 days (unconfirmed) | 600,000 | 578,580 | 567,235 | 5.46% | 1.0% | 3 | 3 | Acceptable fallback |
| Documentary collection D/A 90 days | 600,000 | 561,030 | 550,029 | 8.33% | 4.0% | 4 | 4 | Reject — risk too high |
| Open account 90 days | 600,000 | 537,780 | 527,235 | 12.13% | 8.0% | 5 | 5 | Reject — never beats sight LC |
Task E — UCP 600 discrepancy check (confirmed sight LC)
| # | Presented | Discrepancy | UCP 600 |
|---|---|---|---|
| 1 | Invoice USD 605,000 | YES — exceeds LC amount | Art. 18(b), Art. 30 |
| 2 | B/L "received for shipment" | YES — not shipped on board | Art. 20(a)(ii) |
| 3 | Insurance 100% of value | YES — 110% CIF required | Art. 28(f)(ii) |
| 4 | Certificate of origin consistent | NO | Art. 14(d) |
| 5 | Shipment after latest date | YES — late shipment | Art. 14(c), field 44C |
Impact: fee USD 90; expected loss 1,200 → 48,000; all-in cost 3.38% → 11.33%; sight LC drops from rank 1 to rank 4 — a discrepant LC is worth less than a documentary collection.
Deliverables
Written report (PDF, 6 pp)
Tasks A–F, executive recommendation, model guide — navy/gold, name/course/assignment on page 1.
Open reportExcel model
7 sheets: Assumptions · TaskA · TaskB_C_Model · TaskD_Summary (2 charts) · TaskE_UCP600 · Sensitivity. All formulas reference the Assumptions block.
Download .xlsxWorkbook PDFTask F — institutions
EXIM Bank finances and refinances the deal (subvention worth USD 2,100), the WTO keeps the German market open on bound terms, the World Bank Group (IFC GTFP / MIGA) lowers the cost of the bank confirmation.
Read page 5Sensitivity
Sight LC is the best term at every cost of capital from 8% to 16%. Break-evens: advance wins only if the concession is below 3.36%; open account needs a negative default probability (−0.93%) — impossible.