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A farmer sells 4 million bushels of corn. The spot price of $2.10 per bushel. The total cost of production was $9.2 million. The farmer
A farmer sells 4 million bushels of corn. The spot price of $2.10 per bushel. The total cost of production was $9.2 million. The farmer has an effective tax rate of 25%. If the farmer entered into a futures contract at a price of $2.40 per bushel on 4 million bushels, what is the farmer's net loss or gain?
a)$100,000 loss
b) $800,000 loss
c) $300,000 gain
d) $400,000 gain
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