Question

Suppose today is May 1, 2014, and your firm produces breakfast cereal and needs 85,000 bushels of corn in July 2014 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might rise between now and July. Each contract is for 5,000 bushels; the settle price for July 2014 is $5.19 per bushel. How many contracts do you buy

Answer 1

17

Step-by-step explanation:

We have the following information from this question;

Total amount of corn bushel needed = 85,000

The number of contract = 5000

Settle price = $5.19

This is asking us to state the number of contract that is to be bought.

Divide amount of corn bushel by contract

= 85,000/5000

= 17

Therefore the number of contract to buy is 17