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# The question I entered I need answer, ABC Corp. mines

### Customer Question

Hi
JA: Hello. What seems to be the problem?
Customer: The question I entered I need answer for that
Customer: ABC Corp. mines copper, with ﬁxed costs of \$0.60/lb and variable cost of \$0.30/lb. The 1-year forward price of copper is \$1.10/lb. The 1-year effective annual interest rate is 6.2%. One-year option prices for copper are shown in the table below.
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Customer: no
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Submitted: 1 year ago.
Category: Multiple Problems
Customer: replied 1 year ago.
ABC Corp. mines copper, with ﬁxed costs of \$0.60/lb and variable cost of \$0.30/lb. The 1-year forward price of copper is \$1.10/lb. The 1-year effective annual interest rate is 6.2%. One-year option prices for copper are shown in the table below.Strike Call Put
0.9500 \$0.0649 \$0.0178
0.9750 0.0500 0.0265
1.0000 0.0376 0.0376
1.0250 0.0274 0.0509
1.0340 0.0243 0.0563
1.0500 0.0194 0.0665In your answers, consider copper prices in 1 year of \$0.70, \$0.80, \$0.90, \$1.00, \$1.10, and \$1.20.If ABC Corp. does nothing to manage copper price risk, what is its proﬁt one year from now, per pound of copper? If on the other hand ABC Corp. sells forward its expected copper production, what is its estimated proﬁt one year from now? Construct a table for the two scenarios.
Assume the 1-year copper forward price were \$0.90 instead of \$1.10. If ABC Corp. were to sell forward its expected copper production, what is its estimated proﬁt one year from now? What if the forward copper price is \$0.60? Should ABC Corp. produce copper? Construct tables for the scenarios.
Using table, compute estimated proﬁt in 1 year if ABC Corp. buys a put option with a strike of \$1.00.
Using table, compute estimated proﬁt in 1 year if ABC Corp. sells a call option with a strike of \$1.00.
Using table, compute estimated proﬁt in 1 year if ABC Corp. buys collars with the following strikes:
\$0.95 for the put and \$1.00 for the call
\$0.975 for the put and \$1.025 for the call
\$1.05 for the put and \$1.05 for the callComplete your responses in 2-4 pages using Microsoft Word or Excel. For calculations, you must show work to receive credit.
Customer: replied 1 year ago.
This is the full question. it wont let me type the full question.
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  F. Naz replied 1 year ago.

Please accept the offfer so the answer may be provided in 24 hours

Customer: replied 1 year ago.