Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 7. a sugar mill intends to expand its operations,

7. A sugar mill intends to expand its operations, for this it requires making investments...

90.2K

Verified Solution

Question

Finance

7. A sugar mill intends to expand its operations, for this it requires making investments which will be financed through the issuance of a bond with a maturity of 3 years and with two lines of credits. The mill requires its cash flow to be stable for the next 18 months in order to to meet its commitments as well as to carry out the expansion of its operation. The wit has several contracts with 24 for the sale of sugar to different beverage bottlers, so Income is expected from the sale of fixed amounts of sugar to these bottlers, the price of sweeteners has been very volatile in recent months and is expected to remain volatile in the next 15 months. to. If the mill wishes to cover its income from sugar, what type of forward contracts would they be adequate? Based on your previous answer, answer the following sections (that is, based on contracts forwards) b. If the price of sugar is expected to rise in the coming months, is your recommendation adequate? of subsection a? Justify your answer, don't just answer negative or affirmative. c. If the price of sugar is expected to fall in the coming months, is your recommendation adequate? of subsection a? Justify your answer, don't just answer negative or affirmative.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students