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andriy [413]
3 years ago
5

One year ago, you entered into a futures contract to buy 100,000 euros at a futures contract price of $1.22, with a settlement d

ate in one year. Assume that at the contract's maturity the spot rate of the euro is $1.25, Determine the total dollar amount of your profit or loss from speculating with the futures contract.
Business
1 answer:
Law Incorporation [45]3 years ago
8 0

Answer:

Profit of $3000

Explanation:

The exchange rate of a future contract is usually fixed at the time when the contract is buy 100,000 euros at a futures contract price of $1.22.

The Value in dollars at the time is: $122,000

At the maturity spot rate of the euro is $1.25.

The value of the contract is: $125,000

The difference:

$125,000-122,000

=$3000.

Since the maturity spot rate is higher, there is a profit of $3000 from speculating with the futures contract.

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A.The loss on the cash sale of equipment was $4,375 (details in b).B. Sold equipment costing $97,875, with accumulated depreciat
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Answer:

<u><em>Cash Flow Statement </em></u>

Cash flow from Operating Activities

Adjustment for Non - Cash items :

loss on the cash sale of equipment                            $4,375

Adjustment for Working Capital items :

Increase in short-term note payable                           $5,700

Net Cash from Operating Activities                           $10,075

Cash flow from Investing  Activities

Proceeds from sale of equipment                            $28,625

Purchase of Equipment                                            ($64,000)

Net Cash from Investing Activities                           ($35,375)

Cash flow from Financing  Activities

Repayment of the long-term notes payable           ($58,625)

Issue of Common Stocks                                           $84,000

Dividend Paid                                                            ($53,500)

Net Cash from financing Activities                           ($28,125)

Movement During the Year                                     ($53,425)

Explanation:

The Indirect method reconciles the Operating Profit to the Cash Flow from Operating Activities by adjusting the following items, (1) Non-cash items previously included or deducted from the Operating Profit and (2) Changes in Working Capital items.

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