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What is the company expected gross profit-loss

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The one year forward price of silver is currently trading at $17.51 per ounce. A silver mining company has a total cost of $9.95 per ounce to mine and refine silver.

a) If the company does not hedge its expected production and silver will be at $17.95 one year from now, what is the company's expected Gross Profit/Loss?

b) Calculate the P/L for the company if it hedges 50% of the expected production at the current 1-year forward price and assume the price of silver will end up at $14.25 one year from now.

Reference no: EM132689430

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