Question: This question is based on the information provided below. I am trying to see if own answer and work is correct. Please read the 11

 This question is based on the information provided below. I amtrying to see if own answer and work is correct. Please readthe 11 pictures I have posted before answering the question and pleaseprovide a detailed solution (with steps if needed). Thank you. Question:The purposeof this question is to evaluate the effect of quantity uncertainty whenusing derivatives to manage risk. To explore this issue evaluate what happensif all the estimated fuel usage of 126,000 gallons is hedged withthe swap in the following four scenarios: Scenario A: Higher fuel usagecombinedwith a high average fuel price. Specifically, 141,000 gallons of fuelused, averagefuel price 4.20$/gallon, $1,456,000 revenue and other costs of $840,000 Scenario B:Lower fuel usagecombined with a high average fuel price. Specifically, 111,000 gallons

This question is based on the information provided below. I am trying to see if own answer and work is correct. Please read the 11 pictures I have posted before answering the question and please provide a detailed solution (with steps if needed). Thank you.

Question:The purpose of this question is to evaluate the effect of quantity uncertainty when using derivatives to manage risk. To explore this issue evaluate what happens if all the estimated fuel usage of 126,000 gallons is hedged with the swap in the following four scenarios:

Scenario A: Higher fuel usage

combined with a high average fuel price. Specifically, 141,000 gallons of fuel

used, average fuel price 4.20$/gallon, $1,456,000 revenue and other costs of $

840,000

Scenario B: Lower fuel usage

combined with a high average fuel price. Specifically, 111,000 gallons of fuel

used, average fuel price 4.20$/gallon, $1,144,000 revenue and other costs of $

660,000

Scenario C: Higher fuel usage

combined with a low average fuel price. Specifically, 141,000 gallons of fuel

used, average fuel price 3.30$/gallon, $1,456,000 revenue and other costs of $

840,000

Scenario D: Lower fuel usage

combined with a low average fuel price. Specifically, 111,000 gallons of fuel

used, average fuel price 3.30$/gallon, $1,144,000 revenue and other costs of $

660,000

For each scenario calculate

the profit and the average price paid per gallon. Express all your calculated

average prices per gallon with three decimals.

of fuelused, average fuel price 4.20$/gallon, $1,144,000 revenue and other costs of$660,000 Scenario C: Higher fuel usagecombined with a low average fuel price.Specifically, 141,000 gallons of fuelused, average fuel price 3.30$/gallon, $1,456,000 revenue andother costs of $840,000 Scenario D: Lower fuel usagecombined with a lowaverage fuel price. Specifically, 111,000 gallons of fuelused, average fuel price 3.30$/gallon,$1,144,000 revenue and other costs of $660,000 For each scenario calculatethe profitand the average price paid per gallon. Express all your calculatedaverage pricesper gallon with three decimals. image text in transcribedimage text in transcribedimage text in transcribed

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