You ordered 1,000 tons of cocoa beans, which will be delivered to your chocolate manufacturing plant in PA in March next year. The current price of cocoa beans, as of today, is $2,260 per ton. There is an investor company who currently offers two types of risk hedging contracts: -Forward contract: $2,400 per ton at a fixed cost of $30,000. -Futures contract: $2,400 per ton at a cost of $50 per ton (therefore, the up-front cost is 1000 tons * $50 per ton = $50,000) Assume that the price of cocoa beans went down to $2,200 per ton in March 2023. How much would you need to pay for 1,000 tons of cocoa beans under the futures contract?
You ordered 1,000 tons of cocoa beans, which will be delivered to your chocolate manufacturing plant in PA in March next year. The current price of cocoa beans, as of today, is $2,260 per ton. There is an investor company who currently offers two types of risk hedging contracts: -Forward contract: $2,400 per ton at a fixed cost of $30,000. -Futures contract: $2,400 per ton at a cost of $50 per ton (therefore, the up-front cost is 1000 tons * $50 per ton = $50,000) Assume that the price of cocoa beans went down to $2,200 per ton in March 2023. How much would you need to pay for 1,000 tons of cocoa beans under the futures contract?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 25P
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You ordered 1,000 tons of cocoa beans, which will be delivered to your chocolate manufacturing plant in PA in March next year. The current price of cocoa beans, as of today, is $2,260 per ton.
There is an investor company who currently offers two types of risk hedging contracts:
-Forward contract: $2,400 per ton at a fixed cost of $30,000.
-Futures contract: $2,400 per ton at a cost of $50 per ton (therefore, the up-front cost is 1000 tons * $50 per ton = $50,000)
Assume that the price of cocoa beans went down to $2,200 per ton in March 2023. How much would you need to pay for 1,000 tons of cocoa beans under the futures contract?
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