17 On October 31, Year 1, Trailer Homes Company (THC) determines that it will need...
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17 On October 31, Year 1, Trailer Homes Company (THC) determines that it will need to buy 175,000 lbs of aluminum siding panels on April 30, Year 2. In order to hedge the risk that the price of the aluminum siding panels will increase in six months, the Treasurer simultaneously takes a long position in an aluminum forward contract, where the company agrees to purchase 175,000 lbs of aluminum for $3756/b, on April 30 Year 2. The prices for the aluminum siding panels and the aluminum forward are as follows Aluminum Siding /ib. Aluminum Forward /ib. October 31, Year 1 $5.390 $3.756 January 31, Year 1 $5 552 $3.881 $3.925 April 30 Year 2 $5.768 Assuming that THC has a fiscal reporting year-end of January 31 what is the net cash paid for the aluminum siding panels on April 30 after the aluminum forward contract is also settled on that date? 69'F Clear o va October 31, Year 1 $5.390 $3.750 January 31, Year 1 $5.552 $3881 April 30, Year 2 S5.768 $3.925 Assuming that THC has a fiscal reporting year-end of January 31, what is the net cash paid for the aluminum siding panels on April 30 after the aluminum forward contract is also settled on that date? $322,525 $979,825 $1,001,700 O $1,009,400 63F Clear earch O O
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