bushels of corn

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A farmer currently holds 5000 bushels of corn. The local mill is offering a price of $2.18 a bushel. Currently, a 3  month futures contract is trading at $2.24. The farmer is considering selling to the local mill or holding the corn

in inventory and selling a futures contract. The farmer can store and insure the corn at a total cost of 1 cent per

bushel per month. Payment for this cost is due up front, at date 0. Interest rates are 10%, continuously


a. Which alternative should the farmer pursue? Why?  b. Are there any additional factors that need to be considered?

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