Question
in six months, a cereal company plans to sell 40,000 boxes of wheat crips for 3.50 per box and will need to buy 20,000 bushels
in six months, a cereal company plans to sell 40,000 boxes of "wheat crips" for 3.50 per box and will need to buy 20,000 bushels of wheat to do so. In doing so, it also incurs non-wheat costs of $6,000 the current spot price of wheat is $6.30 per bushel, and the six month forward price is $6.49. the company will hedge by buying wheat forward. what total profit would be earned if the market price of wheat in six months is $5.70, $6.50, and $6.90 respectively?
A.$4,200;$4,200;$4,200;$4,200
B.$25,716;$25,716;$25,715;$13,716
c.$20,000;$12,000;$4,000;$$-4,000
d.$8,086;$8,086;$$86;$86
e.$2,284;$-5,716;$-9,716;$-9,716
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