Conducting extraction operations in the alberta tar sands

Assignment Help Business Economics
Reference no: EM133067746

-Your firm exports goods to the United States and will be collecting a $25,000,000 receivable in 3 months' time. Your boss however, is worried about what she believes to be continued weakness in the US dollar relative to the Canadian dollar. Recommend 3 tools that could be used to hedge this risk exposure and explain how you would use them to remove this uncertainty.

-Explain why exotic risks (volcanic explosions, locust plague, angry despot, civil war, etc) can be very difficult (if at all) and expensive to hedge against.

-Consider a firm conducting extraction operations in the Alberta Tar Sands. If the price of its output falls below the cost of extraction, the firm has retained the strategic option to cease production and send its workforce home (though this has cost the firm somewhat greater labour costs). The real option to suspend operations can be viewed as having what type of option on the price of output (put or call)? Explain.

Reference no: EM133067746

Questions Cloud

What is the present value at a discount rate : You received the set of cash flows year 1 through 5 $1000; $4000; $9000; $5000 and $2000 respectively. What is the Present Value at a discount rate of 8%
Prepare the journal entries that relate to the sale : Prepare the journal entries that relate to the sale of the Canadian Winter Package and warranty until year-end
What is the company atcf that year : Company C recorded the following the past year: revenues = $250,000; expenses = $40,000; depreciation = $30,000; effective income tax rate = 35%.
Calculate the project completion time : Calculating Expected Task Times and Draw the diagram that shows the relationship of the tasks - Develop the Early Start (ES) and Early Finish (EF) network
Conducting extraction operations in the alberta tar sands : -Your firm exports goods to the United States and will be collecting a $25,000,000 receivable in 3 months' time. Your boss however, is worried about what she be
Calculate the after-tax cost of debt : -Nova Inc. is interested in measuring its overall cost of capital. The tax rate of the firm is currently 40%. The needed financial information and data are as f
Describe the results of the auction : The U.S. Treasury conducts its Dutch auction for the sale of $3,000 in par on a T-note with a 10-year original maturity. Wells Fargo bids a yield of 2.0% on $1,
Calculating expected task times : Calculating Expected Task Times and Draw the diagram that shows the relationship of the tasks - Determine the optimal solution through Stepping Stone and MODI
Low fixed costs relative : Assume LK Metals is similar to its industry with one exception; it has low fixed costs relative to all other firms in that industry.

Reviews

Write a Review

Business Economics Questions & Answers

  Calculate the price elasticity of gasoline

Analyze gasoline price hike statistics in the following scenario. In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon. Calculate the price elasticity of gasoline. Calculate the price elasticity of demand for gasoline. Calculate the ..

  Considering the restaurant workplace

Choose a fast food restaurant or chain and talked about the costs that the restaurant may have (1 page please), not as company. Just considering the restaurant workplace, include these three things:

  Generate long-term benefits

Why is it possible that the stimulus package might not generate long-term benefits?

  The quantity of loanable funds demanded will increase

If market participants expect higher inflation in the future, the quantity of loanable funds demanded will increase. This will cause a movement along the demand function for loanable funds. If credit risk increases, supply of loanable funds will shif..

  New government spending increases lifespans

Suppose that new government spending increases lifespans. In our model what should be the effect of this on hours worked per person in a given time period? Does it matter whether government spending adds extra years to the lifespan of living adults w..

  What experiences effectively ended loyalty and commitment

What experiences effectively ended the loyalty and commitment-based contract that employees had developed with employers?

  Increased government purchases of goods and services

Assume that capital is perfectly mobile, the price level is fixed, and the exchange rate is flexible. Now let the government increase purchases. Explain first why the equilibrium levels of output and the interest rate are unaffected. Then show whethe..

  Indifference curves are linear and have slope

It was assumed in the text that George’s indifference curves do not cut the bottom or left-hand side of the box, and that Harriet’s indifference curves do not cut the top or right-hand side of the box. Show that every allocation on the left-hand side..

  Inflation and unexpected inflation

What is the difference between inflation and unexpected inflation?

  The case in point on income inequality

The Case in Point on Income Inequality in the United States versus continental Western Europe argues that people get, in effect, what they expect. People in the United States attribute success to hard work and skill, while people in Continental Weste..

  What approach should they use

Any city, county, state, or region develop an analysis to determine the feasibility study for its bid. What approach should they use?

  Q1 suppose that in saudi arabia produces 200 million

q1. suppose that in saudi arabia produces 200 million barrels of oil and 3 million cars and that the united states

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd