Draw the payoff diagram for Valero, the long side of the contract. Then draw the payoff diagram for the independent oil company, the short side of the contract.
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- Ryan McGuire Suppose that on 01-Feb-2024, a financial manager takes a long position in 200 Oil Future contracts that expire in June-2024 at a future price of $95.00 per barrel. Each Oil Future contract calls for the delivery of 1,000 barrels. The initial Margin and Maintenance margins are 12% and 5% of the initial face value of the contract, respectively, based on the number of contracts, the number of underlying assets per contract, and the future price on the settlement date (200 x 1,000 x $95.00). The manager holds the contract for 10 business days and needs to calculate their margin account balance for each day based on the provided daily prices for the respective Oil Future contract per barrel. Additionally, determine whether a Margin Call has occurred and, if so, calculate the value that the manager needs to deposit. Initial Margin Maintenance Margin Day Contract Opening D+1 D+2 D+4 D+5 D+6 D+7 D+8 D+9 D+10 Future Price/ per Underlying Asset $ $ $ $ $ $ $ $ $ $ 95.00 94.00 94.00…Idris has been awarded a contract to supply a crude palm oil at a price %1000 per metric ton. Deeva Mills Berhad, an established company will purchase this commodity as pe agreed price. An agreement has been signed between Idris and Deeva Mills Berhad. Analyse the financing facilities that suits to the above situation?Euro Aviation signed a purchase commitment for jet fuel in Year 1 for in the amount of $10,000,000. The fuel is to be delivered in Year 2. At December 31, Year 1 the market value of the contract is $11.200,000 due to an increase in jet fuel prices. It is expected the gain will be realized in Year 2 as jet fuel is delivered. 1. Describe how Euro Aviation may account for this contract at the end of Year 1 under IFRS (Is there more than one option and specifically what are they)? 2. Describe how Euro Aviation may account for this contract at the end of Year 1 under US GAAP?
- Solve in Excel. Under contract, Rug Doctor will provide Value Markets with equipment and supplies on 1/2/2013. The equipment has a $655,000 fair market value; the supplies has a value of $110,000. Value Markets agrees to pay Rug Doctor $100,000 every three months over two years, 4/2/2013 to 10/2/2015. The rate to discount the cash flows is 8%. Calculate the total contract price (for revenue recognition).Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?Home Products Inc. (HPI) entered into a contract on June 30, Year 1, to buy 750,000 pounds of aluminum siding on September 30, Year 1, at a price of $18.25 a pound. The company's troasurer simultaneously took a short position in a forward contact by agreeing to sell 750,000 pounds of aluminum at a price of $16 50 a pound on September 30, Year 1. Assume the following prices for aluminum siding and the aluminum forward contract. June 30 Year 1 September 30 Year 1 Aluminum siding / lb. $18.25 $17 95 $16.50 $16.32 Aluminum forward / Ib Based on the above what is the earnings effect of the aluminum siding purchase commitment with the corresponding fair value hedge at the September 30, Year 1 end?
- Idris has been awarded a contract to supply a crude palm oil at a price RM1000 per metric ton. Deeva Mills Berhad, an established company will purchase this commodity as per agreed price. An agreement has been signed between Idris and Deeva Mills Berhad. Based on the situation above, please answer the following questions: a. Analyse the financing facilities that suits to the above situation. b. Discuss the responsibilities of the parties involved in this contract. c. Explain the benefit received by Idris if he enters into this contract. d. Discuss the consequences faced by Idris if he unable to deliver the commodity within the stipulated time.For firm needs 1,000,000 barrels of WTI crude oil 6 months from today. You enter into a forward contract to receive WTI crude oil 6 months from today. The current price of a barrel of WTI is $44, the cost of storage for 6-months is $3.9, and the risk-free rate of return is 2% for 6 months. The cost of storage needs to be paid today. What will the maximum contracted price today be for the payment to be made 6-months from now for 1,000,000 barrel delivery? You will pay the counterparty the contracted price 6-months from now. Assume zero transaction costs.Apex company purchase 10 Oil Future contracts with delivery in 6 months. Each contract was for 5,000 barrels with a price of $85 per barrel and a margin requirement of $42,500 per contract. The market price per barrel at the close of the 6 months is $87. How much per barrel with Apex pay for the oil? $85 $87 $42.50
- Swenson Oil & Gas allows its customers to prepurchase heating oil in June for the coming winter. Customers who took advantage of the offer prepurchased 400,000 gallons of oil at $3.00 per gallon. Swenson hedged its position by contracting to purchase 400,000 gallons of oil for November delivery at a price of $2.50 per gallon. If the November spot price is $2.25 per gallon, the payoff to Swenson will be a.(100,000) b. 0 c. 100,000 d. 200,000ZEN Ltd signs a contract on 30 June 2019, agreeing to build a bridge for XYN at a contract price of $20 million. XYN will be in control of the asset throughout the construction process. ZEN estimates that construction costs will be as follows: Year Ending 30th June 2020 Cost $ 5,000,000 $ 8,000,000 $ 3,000,000 $16,000,000 30th June 2021 30th June 2022 Total The contract provides that XYN will make payments on 30 June of each year as follows: $ 4,000,000 $ 10,000,000 $ 6,000,000 $20,000,000 2020 2021 2022 Total The contract is completed as expected on 30 June 2022. Assume that actual costs and cash collections with expectations and that cost (an input measure) is used as the basis for assessing progress on the car contract. Required: (a) Calculate the income and gross profit recognised each year 2020, 2021, 2022. (b) Prepare the journal entries for the year ended 30th June 2020.On October 1, 2024, Wildhorse Corporation ordered some equipment from a supplier for 322,000 euros. Delivery and payment are to occur on November 15, 2024. The spot rates on October 1 and November 15, 2024, are $1.20 and $1.30, respectively. (a) - Your answer is partially correct. Assume that Wildhorse entered into a forward contract on October 1, 2024, to hedge the firm commitment. The forward rates for euros for November 15 delivery were October 1 November 15 $1.23 $1.30 Furthermore, assume the equipment was purchased and paid for on November 15. Prepare all journal entries needed to record and settle the hedge and to record the purchase of the equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
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