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In six months, a cereal company plans to sell 10,000 boxes of Wheat Crisps for $4.50 per box and will need to buy 5,000 bushels
In six months, a cereal company plans to sell 10,000 boxes of Wheat Crisps for $4.50 per box and will need to buy 5,000 bushels of wheat to do so. In doing so, it also incurs non-wheat costs of $10,000. The current spot price of wheat is $6.50 per bushel, and the six-month forward price is $6.70. The company will hedge by buying wheat forward. What total profit would be earned if the market price of wheat in six months is $5.90, $6.30, $6.70, and $7.10, respectively?
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