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15 November, 08:19

Diwali Airlines has a contract that gives them the opportunity to purchase up to 10,000,.000 jet fuel at $2.00 per gallon. The current market price of jet fuel is $226 per gallon. Diwali believes gallons of they will only need 6,000,000 gallons of jet fuel. What is the value of this opportunity?21) A) $9,040,000 B) $2,600,000 C) $1.040.000 D) $1.560.000

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  1. 15 November, 08:44
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    Option (D) is correct.

    Explanation:

    Diwali Airlines has a contract,

    Given that,

    There is an opportunity to purchase jet fuel upto = 10,000,000 gallons

    Price = $2 per gallon

    Current market price of jet fuel = $2.26 per gallon

    The value of this opportunity:

    = Jet fuel needed * (Current market price - $2)

    = 6,000,000 gallons * $0.26

    = $1,560,000
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