In July of 2011, Sue enters into a forward agreement with Ann to lock in a sales price for wheat. Sue anticipates selling 300,000 bushels of wheat at the market in March of 2012. Ann agrees to a forward with Sue to buy 300,000 bushels at $6.20. Sue’s cost for the wheat is $45.90 per bushel. The contract allows for net settlement.

REQUIRED

Determine the economic income of the sales transaction at various price levels at maturity for the forward. Consider market prices of $6.00, $6.10, $6.20, $6.30, and $6.40. Make a table similar to the Gre copper example found in the chapter.