P 12-2 The economics of derivatives Dodo Corporation enters into a forward agreement with Waldo Corporation on

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P 12-2 The economics of derivatives Dodo Corporation enters into a forward agreement with Waldo Corporation on September 1, 2016, to sell 500,000 tons of coal on July 1, 2017, at $55.30. Dodo’s cost of the coal is $54.90 per ton. The contract allows for net settlement.

REQuIRED: Determine the economic income from the sales transaction at various price levels at maturity of the forward. Consider market prices of $55.50, $55.30, $55.10, $54.90, and $54.80. Make a table similar to the Gre copper example found in the chapter.

438 CHAPTER 12

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Advanced Accounting

ISBN: 9781292214597

13th Global Edition

Authors: Joseph H. Anthony, Bruce Bettinghaus, Floyd A. Beams, Kenneth Smith

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