1. A fast food manufacturer signs a forward agreement with a potato farm to buy potatoes to make french fries. The strike price of the agreement is $0.5/lb and the maturity date is June 2023. The potato farm charges the food manufacturer $0.01 for each pound of potatoes to be delivered. The agreement is signed in May 2020. It is for 500,000 lbs of potatoes. If on the day of delivery the spot price of the potatoes (meaning the market price of the potatoes) becomes $0.75/lb what is the potato farm's profit/loss from this agreement? (you need to include the price of the contract in your calculations - Do not forget!)

   		Profit of $80,000
   		Loss of $120,000
   		Profit of $35,000
   		Loss of $50,000