What was the present worth of swa savings per gallon

Reference no: EM131004263

Southwest Airlines hedged the cost of jet fuel by purchasing options that allowed the airline to purchase fuel at a fixed price for 5 years. If the market price of fuel was $0.50 per gallon higher than the option price in year 1, $0.60 per gallon higher in year 2, and amounts increasing by $0.10 per gallon higher through year 5, what was the present worth of SWA's savings per gallon if the interest rate was 10% per year?

Reference no: EM131004263

Questions Cloud

How much would the gradient have to be in each year : The present worth of income from an investment that follows an arithmetic gradient was projected to be $475,000. If the income in year one is expected to be $25.000, how much would the gradient have to be in each year through year 8 if the intere..

Ranging from traditional to contemporary : Oakmaster Furniture Inc. produces several lines of oak furniture, ranging from traditional to contemporary. The firm has been in business for more than 20 years, serving primarily the western half of the United States. Headquartered in Portland, O..

What is the recovery of chloroform from this column : What is the recovery of chloroform from this column? 12 marks Provide the correct set of calculations - What are the liquid and vapour flow rates in the two sections of the column?

What was the equivalent annual worth of the income : NMTeX Oil company owns several gas wells in Carlsbad, NM. Income from the depleting wells has been decreasing according to an arithmetic gradient for the past five years. If the income in year 1 from well no. 24 was $390,000 and it decreased by $..

What was the present worth of swa savings per gallon : If the market price of fuel was $0.50 per gallon higher than the option price in year 1, $0.60 per gallon higher in year 2, and amounts increasing by $0.10 per gallon higher through year 5, what was the present worth of SWA's savings per gallon if..

How much could mountain power and light afford to spend : If the equipment provides more efficient turbine performance to the extent of $20,000 in year 1, $22,000 in year 2, and amounts increasing by $2000 per year, how much could Mountain Power and Light afford to spend now at 10% per year interest if i..

Briefly explain the importance of studying communication : Briefly explain the importance of studying communication. How will the study of communication concepts and theories assist you in other course work and in your future career?

How much will the company have to set aside : Southwestern Moving and Storage wants to have enough money to purchase a new tractor-trailer in 5 years at a cost of $290,000. If the company sets aside $100,000 in year 2 and $75,000 in year 3, how much will the company have to set aside in year ..

How can we measure the geographical reach of stonehenge : How can we measure the geographical reach of Stonehenge? Where did the people who were buried there come from? How do we know? What does this information tell us about the geographic reach of Stonehenge?

User Account

All Pages