Biology Forums - Study Force

Other Fields Homework Help Finance Topic started by: johnpaech on Nov 19, 2017



Title: Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope (ANS) crude oil for ...
Post by: johnpaech on Nov 19, 2017
Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope (ANS) crude oil for 10,000 Bbls of West Texas Intermediate (WTI) crude oil.  Assuming you currently have 10,000 Bbls of WTI crude, the added benefit (cost) to you if you take the trade is closest to:
A) ($1400)
B) $1400
C) ($3908)
D) $3908


Title: Re: Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope (ANS) crude oil ...
Post by: anicid on Nov 19, 2017
B
Explanation:  B) Total Benefits

No trade and refine WTI crude (base case)
10,000 Bbls × $77 of gasoline/Bbl = $770,000

Trade WTI for ANS crude
10,150 Bbls × $76 of gasoline/Bbl = $771,400

Added Benefits = Total Benefits - Base Case

Trade WTI for ANS crude
= $771,400 - $770,000 = $1400