During the summer you hadto spends ome time with you runcle,who is a wheatfarmer.Your uncle, knowing you are studying for an MBA at a distinguishedBusinessSchool, asked your help.He is afraid that theprice of the wheat will fall, which will have a severe impact on his profits. Thus he asks you to compute the 1 year forwardprice of wheat. He tells you that it scurren tprice is$3.4 per bushel and interest rates are at 4%.However, he also says that it is relatively expensive to store wheat for one year.Assume that this cost, which must be paid up front, runs at about $0,1 per bushel.What ist he 1 year forward price of wheat? A) $3,44 B) $3,50 C) $3,64 D) none o fthe previous answer is correct ?
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