Question

tibbi baten • 3.A trading company makes a quotation for coal at the price of 2,000 USD per metric ton CIF London, the buyer request a revised price CFRC5% London. Insurance coverage for the original price is for 110% of CIF price against All Risks and War Risk, the rate is 0.8% and 0.6% respectively. To get the same export revenue, what would be the CFR London price?

Answer 1

Total Insurance cost = 0.% +0.6% = 1.4%

Total Insurance cost per Metric Ton = 1.4% of 110% of USD 2000

= USD 30.80

So, CFR price quoted by the seller per metric ton = USD 2000 - USD 30.80

=USD 1969.20

Now if this price has to include 5% commission (CFRC 5%) , then

CFRC5% price to be quoted = USD 1969.2/ (1-0.05)

=USD 2072.84

To get the same reveue , the quoted price should be USD 2072.84 per metri ton