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Use the futures prices in problem 1 for this problem. Suppose that a certain breeding decision would involve an investment of $125,000 with expenditures of

Use the futures prices in problem 1 for this problem. Suppose that a certain breeding decision would involve an investment of $125,000 with expenditures of $15,000 in 3 months, 6 months, and 9 months. The result is expected to be more hogs available for sale at the end of the year. There are two major uncertainties: number of extra hogs available for sale and the price per pound. The expected number of pounds is 250,000 and the expected price of hogs in 1 year is 63.40 cents per pound. Assuming that the risk-free rate of interest is 10% per annum, what is the value of the investment (in thousands of dollars)?

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