feras (4) - Offer Price Based on the future price of NYMEX2...

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Offer Price Based on the future price of NYMEX2 Heating oil, profit margin, swap cost and transaction cost, we are proposing a price of $3.1897 per gallon to Brothers Waste Management (BWM) for delivery of 100,000 gallon of Ultra Low Sulfur Diesel Fuel (ULSDF) for the next 12 months (each month). The price for the fuel includes profit margin of $0.05 per gallon and cover other transactional and operational cost. Calculation for the price The offer price is calculated after taking the average price of NYMEX crude over the next 12 months and adding the swap price of $0.13 per gallon for hedging the basis risk difference and further adding the profit margin of $0.05 per gallon and operating cost of $0.01 per gallon. S. No Month Future price (ULSD) No of contract Purchases Future price NYMEX 1 Jun'11 $ 3.0195 2 $ 2.9422 2 Jul'11 $ 3.0275 3 $ 2.9535 3 Aug'11 $ 3.0425 2 $ 2.9650 4 Sep'11 $ 3.0578 3 $ 2.9800 5 Oct'11 $ 3.0408 2 $ 2.9953 6 Nov'11 $ 3.0329 2 $ 3.0108 7 Dec'11 $ 3.0330 3 $ 3.0254 8 Jan'12 $ 3.0684 2 $ 3.0405 9 Feb'12 $ 3.0589 2 $ 3.0434 10 Mar'12 $ 3.0374 3 $ 3.0339 11 Apr'12 $ 3.0569 2 $ 3.0124 12 May'12 $ 3.0439 3 $ 2.9944 Average Price
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This note was uploaded on 12/04/2011 for the course ECONOMICS 201 taught by Professor Rcollier during the Spring '10 term at Portland CC.

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feras (4) - Offer Price Based on the future price of NYMEX2...

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