Eastmark Electrical Equipment Manufacturers needs to secure its supply of copper for the next year. The price of copper is extremely volatile because of huge month-to-month variation in demand. Eastmark wants to break even with a hedge against future copper prices. Currently, the market price for copper is reasonably low at $3.25 per pound or $325 (CWT). Eastmark has entered into a contract with the supplier for 500,000 pounds of copper per month starting in January at market prices. Eastmark has also entered into a futures contract with a financial institution for 500,000 pounds per month at $3.25 per pound. CWT (hundredweight) is equal to 100 pounds in the United States. a. Calculate the one month financial and the physical results if the market price of copper has risen to $4.50 perÃÂ pound. b. Calculate the one month financial and the physical results if the market price of copper has fallen to $3.00 per pound.
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You wonât have to worry about the quality and deadlinesOrder Paper Now