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Wk 8 Assignment.docx - From Chapter 20 American Machine...

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From Chapter 20: American Machine Tools needs a manager in charge of countertrade. This manage would be skilled in negotiating trades for his firm’s machine tools. Since the U.S. economy is fairly strong, there are two types of countertrades that might work with the Estonian government and help American Machine Tools consummate the sale: a buy-back transaction or a countertrade. In a buy-back transaction, the Estonian government would issue debt denominated in a hard currency to obtain the funds to purchase the equipment from American Machine Tools. It should be able to obtain hard currency debt financing if it is likely that it can service the debt. American Machine Tools, in turn, would agree to buy in dollars from the Estonian tool and die manufacturer enough of the output produced on the machinery to enable it to meet the debt service obligations. A countertrade works similarly, except that American Machine Tools would
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