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How did the answer inflate the component revenue? I saw 1.5% in the question but it doesn’t seem to be the rate he used.
The answer has used 1.5%.
The revenues only inflate in years 2 to 4, so in year 1 there is no inflation and it is 1,200.
In year 2 there is 1 years inflation, and so the revenue is 2,400 x 1.015 = 2,436
In year 3 there is 2 years inflation, and so the revenue is 2,500 x (1.015^2) = 2,576
Etc. 🙂Sir,
Why the unexpired basis is added instead of deducting it in Washi Co’s futures calculation,
as the contract is for six month not seven monthThe answer must be between the 4 month futures price and the 7 month futures price, and here the 7 month price is lower than the 4 month price.
Sir,
Please explain me the theory behind the cross rate calculation for ARD & JPY.
Thank you
See my answer here:
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