The spot price of corn is $5.82 per bushel. The opportunity cost of capital for an...
The spot price of corn is $5.82 per bushel. The opportunity cost of capital for an investor is 0.6% per month. If storage costs of $0.03 per bushel per month are factored in, all else being equal, what is the future value of storage costs over a 6-month period?
a) 0.1827
b) 0.1534
c) 0.1684
d) 0.1772
Please show formula and steps. Thanks!
Homework Answers
Future value = Amount*[{(1+r)^n -1}/r]
= 0.03[{(1+0.006)^6 - 1}/0.006]
=$0.1827
I.e. a
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