1. In July of 2011, Sue enters into a 6 month forward agreement with Ann to lock in a sales price for wheat. Sue anticipates purchasing 300,000 bushels of wheat at $6.50/bushel. At the time of inception of the forward contract, the price is $6.55/bushel. On January 1, the price of wheat is $6.65/bushel. The contract allows for net settlement.

Required: Determine the net settlement on the forward contract. Who pays? How much?