Geoff Industries offers its credit customers a 2 percent discount if they pay within 10
days. This discount is referred to as a:
You expect to deliver 40,000 bushels of wheat to the market in July. Today, you hedge
your position by selling futures contracts on half of your expected delivery at the final
price of the day. Assume that the market price turns out to be 582.0 when you actually
deliver the wheat. How much more or less would you have earned if you had not
bought the futures contracts?
Wheat - 5,000 bu.: U.S. cents per bu.
C.neither more nor less
We are evaluating a project that costs $854,000, has a 15-year life, and has no salvage
value. Assume that depreciation is straight-line to zero over the life of the project. Sales
are projected at 154,000 units per year. Price per unit is $41, variable cost per unit is
$20, and fixed costs are $865,102 per year. The tax rate is 33 percent, and we require a
14 percent return on this project. Suppose the projections given for price, quantity,
variable costs, and fixed costs are all accurate to within 14 percent. What is the