Suppose unleaded gasoline is currently trading at $2.80 per gallon. You face an interest rate of 4.6 percent and a carrying cost of $.11 per gallon per month. The current market price of a four-month futures contract on gasoline is $1.58 per gallon. You are evaluating a three-month carry trade opportunity.

a.Determine the present value of the storage costs (PVSC).(Round your answer to 4 decimal places.)

b.Identify what the futures price should be under spot-futures parity.(Do not round intermediate calculations. Round your answer to 3 decimal places.)

c.Calculate the potential profit per gallon.(Round your answer to 2 decimal places.)