What is its estimated year profit from now

Assignment Help Finance Basics

Reference no: EM132187714

Question - ABC mines copper with fixed costs of $0.50/lb and variable cost of $0.40/lb. The 1-year forward price of copper is $1/lb. The 1-year continuously compounded interest rate is 6%.

If ABC does nothing to hedge copper price risk, what is its profit 1 year from now (per pound of copper)? If, on the other hand, ABC sells forward its expected copper production, what is its estimated 1-year profit from now? In both scenarios, assume the spot price of copper in 1 year can be $0.80, $0.90, $1.00, $1.10, and $1.20.

Reference no: EM132187714

Questions Cloud

What are some of the reasons it is slow to be adopted : Although most would agree that sustainable behavior is a good thing, what are some of the reasons it is slow to be adopted?

Develop a consolidated financial projection of revenue : Develop a consolidated financial projection of revenue, pretax income, and cash flow for the overall business, over that same number of years.

How might you intervene as a social worker? : How might a social worker intervene if one or more of these factors were present and affecting client functioning? Support your answer with your text

Create two tools to measure the effectiveness : Create two tools to measure the effectiveness of your consultant communications. In designing these tools, consider who the audience of the tools.

What is its estimated year profit from now : ABC mines copper with fixed costs of $0.50/lb and variable cost of $0.40/lb. What is its estimated 1-year profit from now

Define what the two research designs are : Review the quantitative and qualitative examples from this week. In 2-3 pages, define what the two research designs are, include a minimum of 3 examples.

Identify the issues in the case : Note that there are no right or wrong answers in this exercise. I want to see that you can identify the issues in the case and provide a rationale decision.

What is the low end of the price range : What is the low end of the price range that ODI should be considering? What is the high end of the price range that ODI should be considering

What about the marketing strategy : Using Internet research, investigate current Federal Reserve Monetary Policy. Write a brief report outlining this policy in the past twelve months.

User Account

All Pages