Answer: Sell four December coffee future contracts at $2.00 per pound
Explanation:
Based on the scenario in the question, the number of contracts that is required for hedging the entire crop will be gotten by dividing the total number of crops by the pounds that are available in one contract. This will be:
= 150,000/37,500
= 4 contracts
Therefore, the answer will be for Jarvis to sell four December coffee future contracts at $2.00 per pound
Answer:
The COGS for the June 1st sale is $17 per unit, and the COGS for the August 27th sale is $20 per unit.
Explanation:
<u>Date</u> <u>Number of units</u> <u>Unit balance</u> <u>Unit cost</u> <u>Average cost</u>
May 7 40 40 $17 $17
June 1 (20) 20 $17
July 28 30 50 $22 $20
August 27 (30) 20 $20
The average COGS after the purchase on July 28 = [(20 x $17) + (30 x $22)] / 50 = ($340 + $660) / 50 = $20
Answer:
The answer is option ( C.) Increase of 1.06 percent
Explanation:
Data provided in the question:
Cost of equity = 14.6%
Market risk premium = 8.4%
Risk-free rate = 3.9%
Company's beta = 1.4
Now,
Expected Return = Risk-free rate + ( Beta × Market risk premium )
= 3.9% + ( 1.4 × 8.4% )
= 3.9% + 11.76%
= 15.66%
Therefore,
The change in firm's cost of equity capital = 15.66% - 14.6%
= 1.06%
Hence,
The answer is option ( C.) Increase of 1.06 percent
