Free Online Course in International Business

Knowledge Statement

Knowledge of Related Financial and Legal Costs ( Bank Charges, Insurance Premiums, Legal Fees)

Goal

The goal of this material is to introduce you to the financial and legal costs related to the financial aspects of international business transactions, including the ways each affects the profitability of such a transaction.

Learning Objective

You will be able to

• identify applicable financial costs.
• identify applicable legal costs.

Introduction

Since an international manager is often responsible for a departmental budget, he/she must know costs of the operation. Even if an international manager has no budget responsibilities, it is important know what the costs are for related financial and legal support in order to measure successful performance. The key to being successful in this area is to understand what costs may be incurred and what specifics need to be requested from the appropriate service provider. It would impossible to provide specific costs in this context since every situation, company, and country will be different.

Bank Charges

Loan Fees

Banks will charge customers fees and interest based on creditworthiness and length of time of the loan. There is no set formula since banks will often require assets as collateral to cover the amount of the loan. With some customers, they require “compensating balances,” meaning that the company needs to keep a minimum balance; therefore, an indirect cost to the customer exists since the funds cannot be used.

Banker's Acceptances Fees

A banker's acceptance is a negotiable instrument which may be used to obtain immediate funds by discount selling to the drawee bank or an investor. The instrument's marketability is limited only by the reputation of the accepting bank and market demand. The net proceeds of the sale are obtained by deducting the following two items from the face amount of the acceptance: (1) the discount rate (Interest Rate x Days to Maturity x Face Amount) and (2) the bank's acceptance commission. The combination of these is referred to as the ʺall inʺ rate.
For example:

Discount Rate (rate earned by investor) 5.13 % p.a.
Bank Commission 1.50 % p.a.
All in Rate 6.63 % p.a.

Our Network Of Sites:

Apply 4 Admissions.com	\| A2ZColleges.com	\| OpenLearningWorld.com	\| Totaram.com
Anatomy Colleges.com	\| Anesthesiology Schools.com	\| Architecture Colleges.com	\| Audiology Schools.com
Cardiology Colleges.com	\| Computer Science Colleges.com	\| Computer Science Schools.com	\| Dermatology Schools.com
Epidemiology Schools.com	\| Gastroenterology Schools.com	\| Hematology Schools.com	\| Immunology Schools.com
IT Colleges.com	\| Kinesiology Schools.com	\| Language Colleges.com	\| Music Colleges.com
Nephrology Schools.com	\| Neurology Schools.com	\| Neurosurgery Schools.com	\| Obstetrics Schools.com
Oncology Schools.com	\| Ophthalmology Schools.com	\| Orthopedics Schools.com	\| Osteopathy Schools.com
Otolaryngology Schools.com	\| Pathology Schools.com	\| Pediatrics Schools.com	\| Physical Therapy Colleges.com
Plastic Surgery Schools.com	\| Podiatry Schools.com	\| Psychiatry Schools.com	\| Pulmonary Schools.com
Radiology Schools.com	\| Sports Medicine Schools.com	\| Surgery Schools.com	\| Toxicology Schools.com
US Law Colleges.com	\| US Med Schools.com	\| US Dental Schools.com