1 BUS 631 International Finance and Banking Case Study Yankee, Inc., a U.S. based MNC, has recently decided to expand its international trade relationship by exporting to France. Bonjour Ltd., a French retailer, has committed itself to the annual purchase of 300,000 pairs of “Speedos,” Yankee’s primary product, for a price of EUR120 per pair. The agreement is to last for two years, at which time it may be renewed by Yankee and Bonjour. In addition to this new international trade relationship, Yankee continues to export to Malaysia. Its primary customer there, a retailer called Leisure Products, is committed to the purchase of 270,000 pairs of Speedos annually for another two years at a fixed price of MYR450 per pair. When the agreement terminates, it may be renewed by Yankee and Leisure Products. Yankee also incurs costs of goods sold denominated in MYR. It imports materials sufficient to manufacture 108,000 pairs of Speedos annually from Malaysia. These imports are denominated in MYR, and the price depends on current market prices for the components imported. Under the two export arrangements, Yankee sells quarterly amounts of 75,000 and 67,500 pairs of Speedos to Bonjour and Leisure Products, respectively. Payment for these sales is made on the first of January, April, July, and October. The annual amounts are spread over quarters in order to avoid excessive inventories for the French and Malaysian retailers. Similarly, in order to avoid excessive inventories, Yankee usually imports materials sufficient to manufacture 27,000 pairs of Speedos quarterly from Malaysia. Although payment terms call for payment within two months of delivery, Yankee generally pays for its Malaysian imports upon delivery on the first day of each quarter in order to maintain its trade relationships with the Malaysian suppliers. Yankee feels that early payment is beneficial, as other customers of the Malaysian supplier pay for their purchases only when it is required. Since Yankee is…