Answer: $55.56
Explanation:
Given the following ;
Spot price per barrel = $50
Storage cost = $3 per barrel
Interest rate(i) = 5% (continously compounded)
Period (t) = 1
Upper bound future price.
Upper bound future price = spot price per barrel + storage cost
Storage cost per barrel = $3, compounded at 5 % per annum for one year.
5÷100 = 0.05
Mathematically, present value of storage cost per barrel =
3e^-(i × t) = 3e^-(0.05×1)
3e^-(0.05) = 2.854
Upper bound for one year future price
($50+$2.854)e^0.05×1
52.854e^0.05 = $55.56
Answer:
Executive summary
Explanation:
It provides information about the business's purpose.
