affiliates in the course of business. The company has determined that on average a remittance from one affiliate to another costs $40. This cost includes bank fees 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.) Aggregating payments 1. In one quarter, the US affiliate made 24 purchases from the Japan affiliate and the Japan affiliate made 8 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 affiliate aggregates all amounts due to :; :Cו

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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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 remittance
from one affiliate to another costs $40. This cost
includes bank fees 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.)
Aggregating payments
1. In one quarter, the US affiliate made 24
purchases from the Japan affiliate and the Japan
affiliate made 8 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 affiliate aggregates all amounts due to
the Japan affiliate and makes a single payment
covering the total due on all 24 invoices and the
Japan affiliate aggregates all amounts due to the
US affiliate and makes a single payment covering
the total due on all 8 invoices?
Transcribed Image Text: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 remittance from one affiliate to another costs $40. This cost includes bank fees 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.) Aggregating payments 1. In one quarter, the US affiliate made 24 purchases from the Japan affiliate and the Japan affiliate made 8 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 affiliate aggregates all amounts due to the Japan affiliate and makes a single payment covering the total due on all 24 invoices and the Japan affiliate aggregates all amounts due to the US affiliate and makes a single payment covering the total due on all 8 invoices?
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