Case study:
Car dealer in VS sells on Dec 10, 2010 10 Mercedes each 100.000 € cogs to a client in Switzerland, payment terms 360 days
He calculates a Margin of 10% over cogs, ie. the sales price is 110.000 € As the client wants to pay the cars in sfr, what is the sfr price that makes
sure we get the 110.000 € ?
Spot rate: 1,25
Sfr interest rate: 1,5% € interest rate: 3%
Forward rate as per Interest rate parity = Spot rate(1+Interest rate Sfr)/(1+Interest Rate Euro)
= 1.25(1+1.5%)/(1+3%)
= Sfr 1.2318/Euro
Hence, price = 110,000*1.2318
= Sfr 135,498
Case study: Car dealer in VS sells on Dec 10, 2010 10 Mercedes each 100.000 €...