Present value of storage cost in dollars

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Reference no: EM132056346

The current price of silver is $12.20 dollars per ounce. The storage costs are $0.24 dollars per ounce per year, a quarter of which is payable in advance at the beginning of each quarter. Assume that interest rates for all maturities equal 7.2% per annum with continuous compounding. The delivery/maturity of futures contract is 3.2 quarters. Answer the following:

1) present value of storage cost in dollars

2) current fair value of the futures contract in dollars

Reference no: EM132056346

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