Gasworks, Inc., has been approached to sell up to 5 million gallons of gasoline in three months
Question:
Gasworks, Inc., has been approached to sell up to 5 million gallons of gasoline in three months at a price of $2.65 per gallon. Gasoline is currently selling on the wholesale market at $2.34 per gallon and has a standard deviation of 62 percent. If the risk-free rate is 6 percent per year, what is the value of this option?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 85% (14 reviews)
Input Area Galllons to sell 5000000 Months to expiration 3 Strike price 265 Current pric...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Corporate Finance
ISBN: 978-0077861759
11th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Question Posted:
Students also viewed these Corporate Finance questions
-
A firm is currently selling on credit terms of net 30, and its accounts receivable average 30 days past due (i.e., the firms average collection period is 60 days).What credit policy variables might...
-
Calculating a Bid Price Your company has been approached to bid on a contract to sell 15,000 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond...
-
Your firm has been approached to become an equity participant in a leveraged leasing deal. You need to estimate the minimum rate of return on equity that is acceptable. You have collected the...
-
Midland Corporation has a net income of $19 million and 4 million shares outstanding. Its common stock is currently selling for $48 per share. Midland plans to sell common stock to set up a major new...
-
An air-filled cubical cavity of size 10 cm has E = 200 sin 30x sin 30y cos 6 X 10 9 t a z , V/m Find H .
-
Visit the Web sites of the top three marketing research firms in Table 1.2. Write a report on the services offered by these firms. Use the framework of Figure 1.3. What statements can you make about...
-
A uniaxial off-axis tensile test is conducted as shown in Figure 4.5. Using the Tsai-Hill criterion and assuming that the lamina strengths are the same in tension and compression, develop an equation...
-
How can an organization maintain its image while dealing with a talent surplus? If layoffs are necessary, what would you recommend managers do to ensure that survivors remain committed and productive?
-
Pick one theoritical framework of your choice to explain a behavior and how it may affect development ?
-
for the number for remaining Raw Materials please simply use an Ending Balance of USD30k for Raw Materials. ?Mira closes her raw materials with USD 30K, with 40k of raw materials moving to Work in...
-
Jared Lazarus has just been named the new chief executive officer of BluBell Fitness Centers, Inc. In addition to an annual salary of $475,000, his three-year contract states that his compensation...
-
The Webber Company is an international conglomerate with a real estate division that owns the right to erect an office building on a parcel of land in downtown Sacramento over the next year. This...
-
How is the periodic interest expense affected by the amortization of the premium on bonds payable?
-
adjusting journal entry ALIF - 1,760 LIMERICK CORPORATION NO. 238 Eastbrook. Alberta. December 15, 20XX PAY TO The ORDER OF EAST WEST COLLEGE $ 44.100.00 --Forty-Four Thousand One Hundred- -00/XX...
-
Explain in bullet points an organisational policy/procedure for a customer complaint, such as a coffee shop
-
How can you use zero-coupon yields to calculate implied one-year forward rates? Give an example.
-
explain why Innovative changes to the current employee value proposition and employee lifetime value approaches may lead to higher employee loyalty
-
Tides are just really, really, long waves. Consider the M2 tide, which has a period of about 12.5 hours. This tide propagates around the world's oceans, which have a depth on the order of 4 km (for...
-
How many moles of glucose are present in 500 kg of glucose, C 6 H 12 O 6 ?
-
(a) Water flows through the nozzle of a garden hose. Find an expression for m in terms of line pressure P 1 , ambient pressure P 2 , inside hose diameter D 1 , and nozzle outlet diameter D 2 . Assume...
-
Maverick Manufacturing, Inc., must purchase gold in three months for use in its operations. Mavericks management has estimated that if the price of gold were to rise above $1,380 per ounce, the firm...
-
An investor is said to take a position in a collar if she buys the asset, buys an out-of-the-money put option on the asset, and sells an out-of-the-money call option on the asset. The two options...
-
Murtaugh Industries has a zero coupon bond issue that matures in two years with a face value of $90,000. The current value of the companys assets is $59,000 and the standard deviation of the return...
-
A consultant advises that a fund pays out $100,000 at the end of 5 years. Provided $12,000 is invested in the fund at the start of each year, beginning immediately and continuing up to and including...
-
Durco Automotive needs a $2 million balance in its contingency fund 3 years from now. The chief financial officer (CFO) wants to know how much to deposit now into Durco's high-yield investment...
-
3. Create a chart for gross margin less R&D and capital costs calculations. a. Calculate gross margin less R&D and capital costs for options A and B. b. Graph total gross margin less R&D and capital...
Study smarter with the SolutionInn App