Question

Suppose that Bento Sushi enters a forward contract to buy 142,000 pounds of salmon at a forward price of $1.03/pound from a farmer in the Atlantic Ocean. What is the contract value for the farmer at the settlement date if the price of salmon on that date is $1.65/pound? Round your final answer to two decimals, that is, if your answer is $1.234, then enter 1.23

          Suppose that Bento Sushi enters a forward contract to buy 142,000 pounds
of salmon at a forward price of $1.03/pound from a farmer in the Atlantic
Ocean.
What is the contract value for the farmer at the settlement date if the price
of salmon on that date is $1.65/pound?
Round your final answer to two decimals, that is, if your answer is $1.234,
then enter 1.23

Suppose that Bento Sushi enters a forward contract to buy 142,000 pounds
of salmon at a forward price of 1.03/pound from a farmer in the Atlantic
Ocean.
What is the contract value for the farmer at the settlement date if the price
of salmon on that date is1.65/pound?
Round your final answer to two decimals, that is, if your answer is 1.234,
then enter 1.23

Added by Mark D.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Supreeta N

09/16/2023

Step 1

The contract value for the farmer at the settlement date can be calculated using the formula: Contract value = (Actual price - Forward price) * Quantity Contract value = ($1.65/pound - $1.03/pound) * 142,000 pounds Contract value = $0.62/pound * 142,000 Show more…

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Suppose that Bento Sushi enters a forward contract to buy 142,000 pounds of salmon at a forward price of $1.03/pound from a farmer in the Atlantic Ocean. What is the contract value for the farmer at the settlement date if the price of salmon on that date is $1.65/pound? Round your final answer to two decimals, that is, if your answer is $1.234, then enter 1.23.