4. GN Power is a generating company and LANECO is a retailer. These two companies are negotiating a long-term contract for the delivery of electricity and both forecast that the average spot price for the duration of the contract will be 20.00 $/MWh. If GN Power is less risk averse than LANECO, what is the price that is more likely to result from these negotiations: A. 21. 00 $/MWh В. 20.00 $/MWh С. 19. 00 $/MWh. Both of these companies must physically trade through the WESM, but they have signed a two-way contract for difference for 100 MWh at 20. 00 $/MWh. If everything happens as planned, describe how trading is settled if the price on the WESM is 23. 00 $/MWh.

4. GN Power is a generating company and LANECO is a retailer. These two companies are negotiating a long-term contract for the delivery of electricity and both forecast that the average spot price for the duration of the contract will be 20.00 $/MWh. If GN Power is less risk averse than LANECO, what is the price that is more likely to result from these negotiations: A. 21. 00 $/MWh В. 20.00 $/MWh С. 19. 00 $/MWh. Both of these companies must physically trade through the WESM, but they have signed a two-way contract for difference for 100 MWh at 20. 00 $/MWh. If everything happens as planned, describe how trading is settled if the price on the WESM is 23. 00 $/MWh.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 20E: Assume the same facts as in E17-19, except that Rix cannot directly observe the stand-alone selling...

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(1) A trader signs a Forward contract on April 30 for the delivery of 500 gallons of oil on October 31. The risk-free rate is 5.00% on April 30 and the current price of oil is $30 per gallon. Each gallon of storage costs $0.03 per day.a. What will be the fair forward price on April 30?b. If the spot price of oil is $45 per gallon on July 31, what profit or loss would the trader incur if they close out (cash settle) their position?
Suppose that on June 5, a Japanese Yen future contract is purchased at the ¥ 123 per dollar (opening price). Contract is for $ 5,000. Initial margin level is 15% of the value of the contract, and maintenance level is %10 of the value of the contract. The future price is ¥ 120 per dollar on June 6. There will be 15% increase in future price on June 7 and 8% decline on June 8? What is the value of the actual margin at the end of the date June 8? (ASSUMPTION: As margin account reaches above the initial margin level, withdraw the amount above the initial margin level)
Assume the same facts as in E17-19, except that Rix cannot directly observe the stand-alone selling prices of the installation and service contracts. However, Rix has determined that the cost of the installation services is 150 and historical margins relative to cost average 20%. Therefore, Rix estimates the stand-alone selling price of the installation services using an expected cost plus a margin approach. Rix decides to use an adjusted market assessment approach to estimate the selling price of the service contract. Rased on information obtained from competitors, Rix determines the average selling price of a similar service contract to be 350. Rix believes that it has a higher cost structure than its competitors and that it should increase this estimate by 10% to achieve an acceptable margin. Required: 1. Determine the stand-alone selling price of each good or service. 2. How should the transaction price be allocated among the products? (Round your answer to the nearest dollar.)
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Suppose the initial margin on heating oil futures is $20, 200, the maintenance margin is S 16, 500 per contract, and you establish a long position of 12 contracts today, where each contract represents 27,000 gallons. Tomorrow, the contract settles down 5.07 from the previous day's price. What is the maximum price decline on the contract that you can sustain without getting a margin call?
A fixed-price-incentive -- firm target (FPIF) contract has a target cost of $100,000, a target profit of $15,000, a target price of $115,000, a ceiling price of $132,000, and a share arrangement of 80/20. If the seller does the work for $80,000 actual cost, how much profit does the buyer pay to the seller?
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Expo Lube is interested in producing and selling an industrial line of oil filters. Market research indicates that wholesale customers are currently willing to pay $8 for similar filters, and that Expo Lube could sell 80,000 units per year at that price. a. If Expo Lube requires a 19 percent return on sales, what is its target cost for the proposed industrial line of filters? b. Assume that market research reveals several of Expo Lube’s direct competitors are likely to lower the wholesale price of similar filters to $7 per unit. To remain competitive, what will Expo Lube’s target cost have to be to maintain a 19 percent return on sales? c. At a wholesale price of $7, Expo Lube estimates that it can sell 83,100 industrial filters per year instead of 80,000 units. Assuming its target costs are attainable, how much more or less profit per year will the company earn at the $7 wholesale price compared to the initial wholesale price estimate of $8?
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2. Investors who take long positions in fures agree to ________ of the commodity on the delivery date, and those who take the short positions agree to _______ of the commodity. a. make delivery; take delivery b. take delivery; make delivery c. take delivery;take delivery d. make delivry; pay the price e. negotiate the pricce; pay the price
Forrzano plc is considering a new investment and has produced the following NPV figures at two discount rates: Discount rates NPV (£000) 8% 200 16% (80) What is the approximate IRR of the project? (round two 2 d.p.) A 13.71% B 10.29% C 11.71% D 12.29%