Final answer:
Between April 1 and July 28, the profit on the natural gas futures is $7,500, and the profit on the electricity futures is -$80,000.
Step-by-step explanation:
Between April 1 and July 28, you will make $7.55 per MWh total profit on the electricity futures because the price decreased from $25 to $23. To calculate the profit per MWh, we subtract the selling price from the buying price, which gives us $23 - $25 = -$2. Then we multiply this by the heat rate of the generating unit, which is 10,000, giving us -$2 * 10,000 = -$20,000. However, we are selling four electricity futures, so the profit is -$20,000 * 4 = -$80,000. But since we are making a profit, the negative sign should be removed, giving us $80,000. Next, between April 1 and July 28, you will make $7,500 on the natural gas futures because the price increased from $2.50 to $2.75. To calculate the profit, we subtract the buying price from the selling price, which gives us $2.75 - $2.50 = $0.25. Then we multiply this by the heat rate of the generating unit, which is 10,000, giving us $0.25 * 10,000 = $2,500. Since we are buying three natural gas futures, the profit is $2,500 * 3 = $7,500. Therefore, option b is FALSE. The correct statement is that between April 1 and July 28, you will make $7,500 on the natural gas futures, not $7,500 on both the natural gas and electricity futures.