I’m working on a finance case study and need guidance to help me learn.Part A –

I’m working on a finance case study and need guidance to help me learn.Part A – 40 marks You have just started work at a small firm that provides advice to small businesses. Your boss Xixi (pronounced she she) has asked you to assist a customer called Amandeep, who has been growing lavender for a number of years and was recently approached by an American organisation which wants to buy all of Amandeep’s 2021 crop. This buyer bought all of Amandeep’s 2020 crop. The American buyer is offering to pay USD 4,000 per pound. Amandeep, being Australian, measures production in grams and kilograms. In 2021, Amandeep produced 5kg of good quality saffron. Amandeep thinks the normal selling price for his crop would be USD 10,000 per kilogram. Amandeep thinks the American buyer is trying to impose a discount, as the buyer is offering to buy the entire crop.Amandeep is concerned about a number of issues. He is irritated with the different measurement bases (pounds v kilos) and wants to know whether the American buyer is trying to impose a discount (pay less than the market rate of USD10,000 per kilogram). You need to provide him with an answer. If the buyer is trying to impose a discount, calculate the total amount of the discount. 3 marks
The buyer will pay for the crop (in USD), once it is delivered to its warehouse in America. This is expected to happen in 17th of September 2021. Amandeep is concerned about currency fluctuations affecting the amount of Australian dollars (AUD) he will receive when he converts the US dollars (USD). He is thinking of buying an insurance product for $1,500 (AUD) around the 22nd of August 2021. This product will lock the exchange rate in, so he will know exactly how much cash he will receive in AUD. If the exchange rates move in one direction, he would receive more AUD, if the rates move in the other direction, he will receive less AUD.
Please note that 1 kg = 2.20462 pounds Amandeep is not sure whether he should buy this insurance, due to its high cost. He argued that the business could not afford this extra expenditure, because ‘every dollar counts’ and they should not risk wasting money by spending it on items that are not essential. He asked if you could advise him on this issue. He wants to get a sense of the riskiness (the volatility) of the exchange rate. Xixi asked you to go to Australian Dollar (AUD) to USD exchange rate history (exchangerates.org.uk), search around that site and get charts which show the exchange rate fluctuations (for the AUD and USD) for the previous 12 months and 90 days. (She expects you will do this around the middle of August, so the charts will be from August 2020 to August 2021 and June 2021 to August 2021). She also wants you to locate other information that may be relevant in preparing advice for Amandeep.(Please note when dealing with foreign exchange, I could say one AUD is worth 0.7581 of a USD (or 75.81 US cents), or I could say that one USD is worth 1.31908 AUD. This is because 1.31908 is the reciprocal of 0.7581 and vice versa. If you are unsure, calculate 1/1.31908. Also calculate 1/0.7581.). You can assume that in mid-August 2021, one AUD was 0.7581. That is, if we receive USD 100, this would be worth AUD 131.908. Calculate the amount of AUD Amandeep would receive if the exchange rate is still the same (0.7581) on the 17th of September. 3 marks
Assume the exchange rate was 0.7800 on the 17th of September. How much would he receive (in AUD)? 3 marks
Assume the exchange rate was 0.7400 on the 17th of September. How much would he receive (in AUD)? 3 marks
The questions above are designed to help you understand the impact of foreign currency movements. You will need this understanding for this part of the question. Assume it is around the 22/8/2021. Advise Amandeep whether he should buy the insurance. You must support your response with arguments. (Approximately 200 to 300 words). 10 marks
You must submit your response to this part of the question by 23.55 on 22/8/2021. To submit this response, please use the drop box in the section called Decision – 22nd of Aug (Part A). This is part of the Group Assignment. Failure to submit this material on time will result in 0 marks for d and e(iii). This is a total penalty of 20 marks.e) On the 17th of September, go to the website of a company that buys and sells currencies. Examples would be xe.com., and exchangerates.org.uk. i.Check the exchange rate and calculate the amount of AUD Amandeep will receive, when the customer pays. 3 marksii..Evaluate the outcome of the decision to buy or not buy the insurance. (Did your decision result in a favourable or unfavourable outcome for the business?) (100 – 150 words) 5 marksiii.Evaluate your decision-making processes when you made that decision in mid-August. Summarize the material you emailed to the unit convenor at that time. Briefly identify and discuss those parts of your decision-making process that were good, and explain why. Also identify those parts of your process that could be improved on. Please note, penalties will apply for generic, non-specific responses. (Approximately 300 words) 10 marks.
Requirements: 1000

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