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An aluminum buckets producer expects to buy 6 0 0 tons of aluminum in 3 months time. To hedge the cost of the input the
An aluminum buckets producer expects to buy tons of aluminum in months time. To hedge the cost of the input the producer goes long futures contracts for tons aluminum at the cost of $ per ton. In months time the price of aluminum has fallen to $ per ton. What will be the total cost to the the producer from the purchase of the tons of aluminum including any money received or spent to settle the futures contracts
Assume all transaction costs are zero.
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