Platinum contracts are trading at $950. NYMEX defines the Platinum contract as 50 ounces/c, $/c, $11,000, $8,000. Your commodities broker quotes you $13/ounce storage and insurance, $160/ounce borrowing fee on platinum, and 8.0% on cash balances - all per annum. JQ Investor decides to arbitrage this price difference using 500 ounces of Platinum. If JQ takes this arbitrage right to delivery, what is the per ounce cost of carry for the transaction (enter as a positive number)
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- Platinum is trading at $1200, but one-year Platinum contracts are trading at $950. NYMEX defines the Platinum contract as 50 ounces/c, $/c, $11,000, $8,000. Your commodities broker quotes you $13/ounce storage and insurance, $160/ounce borrowing fee on platinum, and 8.0% on cash balances - all per annum. JQ Investor decides to arbitrage this price difference using 500 ounces of Platinum. If JQ takes this arbitrage right to delivery, what is the per ounce cost of carry for the transaction (enter as a positive number)XYZ Corp. entered into a long forward contract for 125 pieces of 1-ounce silver at a fixed price of P1,320 to be delivered one year from now. Its current price is P1,330. After one year, the price of silver was P1,340. What is the purchase price that XYZ will be paying for its order?In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station) At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery Assume that the additional term is a prospective modification to the original contract How much revenue will be recognized on the contract for the year?
- In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery Assume that the additional terms anpective modification to the original contract. How much revenue will be recognized on the contract for the year 2020?Terrific Corporation, an equipment distributor, sells a piece of machinery with a list price of P800,000 to Archer Company. Per agreement, Archer will pay P850,000 in one year evidenced by a note. Terrific normally sells at cash price equivalent to 90% of list price. The note has a market rate of 12%. How much should be recorded as Sales? (The PV of 1 at 12% for 1 year is 0.89) P756,500 P850,000 P720,000 P800,000On November 15, 2020, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is P270 per share ounce. On February 15, 2021, the price of gold is P300 per ounce. 1. What amount should be recognized as accounts payable on February 15, 2021? a. 2,700,000 b. 3,100,000 c. 3,500,000 d. 3,000,000
- Based on past experience, Leickner Company expects to purchase raw materials from a foreign supplier at a cost of 1,000,000 marks on March 15, 2018. To hedge this forecasted transaction, the company acquires a three-month call option to purchase 1,000,000 marks on December 15, 2017. Leickner selects a strike price of $0.58 per mark, paying a premium of $0.005 per unit, when the spot rate is $0.58. The spot rate increases to $0.584 at December 31, 2017, causing the fair value of the option to increase to $8,000. By March 15, 2018, when the raw materials are purchased, the spot rate has climbed to $0.59, resulting in a fair value for the option of $10,000.a. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials, assuming that December 31 is Leickner’s year-end and that the raw materials are included in the cost of goods sold in 2018.b. What is the overall impact on net income over the two accounting periods?c. What is the net…In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery How much revenue will be recognized on the contract for the year 2020?On May 1, 2018, Meta Computer, Inc., enters into a contract to sell 5,000 units of Comfort Office Keyboard toone of its clients, Bionics, Inc., at a fixed price of $95,000, to be settled by a cash payment on May 1. Deliveryis scheduled for June 1, 2018. As part of the contract, the seller offers a 25% discount coupon to Bionics for anypurchases in the next six months. The seller will continue to offer a 5% discount on all sales during the same timeperiod, which will be available to all customers. Based on experience, Meta Computer estimates a 50% probabilitythat Bionics will redeem the 25% discount voucher, and that the coupon will be applied to $20,000 of purchases.The stand-alone selling price for the Comfort Office Keyboard is $19.60 per unit.Required:1. How many performance obligations are in this contract?2. Prepare the journal entry that Meta would record on May 1, 2018.3. Assume the same facts and circumstances as above, except that Meta gives a 5% discount option to…
- Legaspi Company produces colorful 100% cotton shirts and the entity needs 50,000 kilos of raw materials in the production process. On December 1, 2021, the entity purchased a call option as a cash flow hedge to buy 50,000 kilos on July 1, 2022. The option strike price is P100 per kilo. The entity paid P50,000 for the call option. The derivative option contract means that if the market price is higher than P100, the entity can exercise the option and buy the asset at the strike option price of P100. If the market price is lower than P100, the entity can throw away the option and buy the asset at the cheaper price. The market price per kilo is P110 on December 31, 2021 and P115 on July 1, 2022. 1. What amount should be reported às derivative asset on December 31, 2021? a. 500,000 b. 450,000 c. 750,000 d. 700,000 2. What amount should be reported as cash settlement from the speculator on July 1, 2022? a. 750,000 b. 700,000 c. 500,000 d. 450,000BESTOIL company consumes 1,000,000 barrels of oil annually. Barrel of oil is traded at $ 49.25 in the spot market. Oil futures contracts with 1 year maturity are traded at USD 54.75 on the Chicago stock exchange. BESTOIL can borrow from banks at 7% annually and if the storage cost of oil is 1.5 USD for 1 barrel, what should the strategy of the firm be?Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. On March 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty Calculate the net cost to counterparty A, before transaction costs.