In July of 2016, Sue enters into a forward agreement with Ann to lock in a sales price for wheat. Sue anticipates selling 300,000 bushels of wheat at the market in March of 2017. Ann agrees to a forward with Sue to buy 300,000 bushels at $5.20. Sue's cost for the wheat is $4.90 per bushel. The contract allows for net settlement.
REQUIRED
Determine the economic income of the sales transaction at various price levels at maturity for the forward. Consider market prices of $5.00, $5.10, $5.20, $5.30, and $5.40. Make a table similar to the Gre copper example found in the chapter.