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A commodity’s spot price as of December 31 is $38/unit, and storage costs are $0.62/unit at...

A commodity’s spot price as of December 31 is $38/unit, and storage costs are $0.62/unit at the end of every month, starting January 31. If the effective monthly interest rate is 1.2% (compounded monthly, not continuously), what will be the forward price for delivery at the end of Aug, assuming the commodity is stored?

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Answer #1

Spot Price = $_28 wnt storage costa $0.62 knit. no 8 periods Effective monthly interest rate : 12% (sann Aug) forward rate :

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