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In February, a company wanted to hedge the future purchase of crude oil some time in June or July by using August oil futures contracts.
In February, a company wanted to hedge the future purchase of crude oil some time in June or July by using August oil futures contracts. The August oil futures price was $72.00 per barrel. When the company decided to buy crude oil in July, the oil spot price was $79 and the August oil futures price was $74. Calculate the net cost of purchasing the oil with hedging.
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