Answer Happy

3. Eastmark Electrical Equipment Manufacturers needs to secure its supply of copper for the next year. The price of copper is extremely volatile because of huge month-to-month variation in demand. Eastmark wants to break even with a hedge against future copper prices. Cur-rently, the market price Chapter 13 and 14 Homework - IEGR 603/459 for copper is reasonably low at $3.25 per pound or $325 (CWT). Eastmark has entered into a contract with the supplier for 500,000 pounds of copper per month starting in January at market prices. Eastmark has also entered into a futures contract with a financial institution for 500,000 pounds per month at $3.25 per pound. Note: CWT (hundredweight) is equal to 100 pounds in the United States. a. Calculate the 1-month financial and the physical results if the market price of copper has risen to $4.50 per pound. b. Calculate the 1-month financial and the physical results if the market price of copper has fallen to $3.00 per pound.