Cronus Airlines has a contract that gives them the opportunity to purchase up to 8,000,000 gallons of jet fuel at $3.00 per gallon The current market price of jet fuel is$3 48 per gallon Cronus believes they will only need 5,000,000 gallons of jot tuel What is the value of this opportunity?OA. $2,400,000OB. $1.440,000OC. $3,840,000OD. $3,000,000

Contract price=$3 per gallon Current price=$3.48 per gallon Required quantity=5,000,000 gallons

Crohus Ainines has a contract that gives them the opportunity to purchase up to 8.000,000 galons of jet fuel at $3.00 per gallon The current market price of jet fuel is $3.48 per galon Cronus believes they will only need 5,000.000 gallons of jet fuel What is the value of this opportunity? OA $2,400,000 OB $1.440.000 OC. S3,840,000 OD. S3.000.000

Crohus Ainines has a contract that gives them the opportunity to purchase up to 8.000,000 galons of jet fuel at $3.00 per gallon The current market price of jet fuel is $3.48 per galon Cronus believes they will only need 5,000.000 gallons of jet fuel What is the value of this opportunity? OA $2,400,000 OB $1.440.000 OC. S3,840,000 OD. S3.000.000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Cronus Airlines has a contract that gives them the opportunity to purchase up to 7000000 gallons of jet fuel at $4 per gallon. The current market price of jet fuel is $4.2 per gallon. Cronus believes they will only need 5000000 gallons of jet fuel. What is the value of this opportunity? OA. $1,000,000 OB. $400,000 OC. $1,400,000 OD. $2,000,000 CECOE
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Question 1) Nascar Company has two alternatives for a new truck investment: Buy or lease. Buying option: The purchasing cost of the truck is 230.000 dollars. The economic life will be five years and at the end fifth year the truck will have a salvage value, 40.000 dollars Repair and insurance costs: 1.year 10.000 dollars 2.year 15.000 3.year 20.000 4.year 25.000 5.year 28.000 Leasing option: Lease period: 5 years Annual lease payments: 60.000 dollars (payments will be made at the beginning of each year) Also, at the beginning of contract period Nascar Co. must pay a deposit, 20.000 dollars. This deposit amount will be refunded at the end of fifth year. According to the leasing contract all repair and insurance expenses are under the responsibility of leasing company. Make your decision according to Net Present Value Method. (Assume the discount rate of the company is 12%) Present value of 1 dollar Period Discount rate (12%) 1 0,893 2 0,797 3…
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