Mathematics · Commercial Banking Limits
STU Ltd. enjoys working capital facilities with Bank E. It has approached the bank for a Letter of Credit (LC) limit for the purchase of raw materials. The relevant annual information provided is given below: - Projected value of annual raw material purchase on credit: Rs. 2,400 lakh - Time taken for advising LC: 18 days - Time taken for shipment and transit period: 22 days - Credit period agreed upon between the seller and the customer: 50 days What is the LC limit required for STU Ltd. based on a 360-day year?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Rs. 500 lakhs
- 2Rs. 550 lakhs
- 3Rs. 600 lakh✓
- 4Rs. 650 lakhs
Correct answer
Rs. 600 lakh
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