Production And Processing Of Maize

Production And Processing Of Maize Maize is the third largest planted crop after wheat and rice. It is mostly used and traded as a leading feed crop but is also an important food staple. In addition to food and feed, maize has wide range of industrial applications as well; from food processing to manufacturing of ethanol. Maize grown is primarily of three types Grain or field Maize, Sweet Maize used mainly as food Popcorn. There are four types of Grain Maize: (a) Dent Maize has a pronounced depression or dent at the crown of the kernels, (b) Flint Maize has the hard starch layer entirely surrounding the outer part of the kernel, (c) Flour, or soft, Maize contains almost entirely soft starch, with only a very thin layer of hard starch and (d) Waxy Maize has a wax-like endosperm 1.1 Global Maize Production The total area under maize cultivation in the world is 139 million hectares with a production of 598 million MT (mMT). Major producers are USA (240mMT), China (125 mMT), European Union (39 mMT), Brazil (37 mMT), Mexico (19 mMT), Argentina (14 mMT) and India (11 mMT). Among all cereals, maize occupies the fifth largest area, fourth largest in output and third largest in yield. Over the past two decades, global maize production has increased by nearly 50 percent, or 1.8 percent annual compound growth rate. 1.2 India Maize Production India is the tenth largest producer with a production of 11.10 mMT from an area of 6.6 million ha. The average yield in India is 1.77 MT/ha which is very low as against 7 MT/ha in temperate areas of developed economies and 3.8 MT/ha of global average. Maize is cultivated in almost all states in the country. Andhra Pradesh is the leading producer in India followed by Karnataka, Bihar, Maharashtra, Tamilnadu, Rajasthan, Madhya Pradesh and Gujarat in the year 2009-10. The crop is grown both in Kharif and Rabi seasons in India with a share of 85 per cent and 15 per cent, respectively. Since the maize is rain dependent, it is mainly grown during kharif season. Maize Area, Production and Yield in India have seen a phenomenal growth over the last five decades and India has emerged from being a net importer to levels of self sufficiency. 1.3 Price Analyses of Maize for last five years If we examine the price trend of maize in Indian market, prices will be on their peak during the months of July-August. From August onwards prices start declining owing to start of kharif season. Price of maize mainly depends upon supply demand structure. One important thing that is visible from the trends is that from the last 3 years price fluctuations within a year is showing same trend. Government announces MSP (minimum support price) of maize every year and the prices are showing an upward trend. The continuous demand for maize in poultry industry and lesser predicted area in the kharif helped the prices to rule around higher side. 1.4 Utilization pattern of Maize in India The below figure depicts the utilization pattern of maize in India. A major portion (46.5%) is used as poultry feed, followed by 33% for human consumption and 11% animal feed. Only 9% is used in starch industry and 0.5% in brewery industry 1.5 Milling of Maize Wet milling produces Maize oil, Maize steep liquor, Maize gluten feed and Maize gluten meal. In contrast to wet milling, dry milling produces only carbon-dioxide and distillers dried grains soluble as by-products but has become the favoured approach for Maize ethanol production due to lower start-up costs. Maize kernels are degerminated by grinding or centrifugation to produce seed germ which produces Maize oil. The starch, gluten and fiber is left after degermination, from which gluten is used to extract Maize gluten meal which is a high-protein animal feed, starch undergoes liquification and saccharification followed by fermentation to form Maize gluten feed when combined with fibres. Fermentation also results in formation of ethanol. The most striking new development has been the rapid expansion in the ethanol industry which has also brought about a sudden increase in the supply of Distillers Grains (DG). Under the dry-milling process, when maize is fermented to alcohol, around one-third of the Dry Matter (DM) is recovered in co-products which, in turn, are further processed into a variety of feed ingredient products. The conversion from DM to DG involves starch fermentation which eventually produces two feed co-products: Maize Condensed Distillers Solubles (CDS) and Maize Distillers Dried Grains with Solubles (DDGS), which are rich in essential nutrients such as protein, fat, minerals. Aside from Distillers Grains, which result from the dry milling process, there are several other maize co-products used in feed rations, mostly derived from the more traditional wet milling process. One ton of maize through wet milling produces 29 kg of Maize oil, 241 kg of 21% protein gluten feed, and 46 kg of 60% gluten meal. In addition to it, either one among starch (571 kg) or sweetener (589 kg) or ethanol (402 kg) can be produced. The most common ones are: Maize Gluten Meal: Dried high protein (almost 60 percent) feed source. It is a residue from maize after the removal of the larger part of the starch and germ, the separation of the bran by the process employed in the wet-milling manufacture of maize starch or syrup. It is commonly used by the poultry industry, farm animal feed in fish and pet food. It is also used in cattle feed. Maize Gluten Feed: Is that part of the commercial shelled maize that remains after the extraction of the larger portion of the starch, gluten, and germ by the processes employed in the wet milling manufacture of maize starch or syrup. It is used in complete feeds for dairy and beef cattle, poultry, swine and pet foods. Maize Seed Cake: With over 17 percent protein, it is considered ideal feed for breeding chickens, ducks, geese, pigs, fish, and other livestock. Maize Germ Meal: Typically contains more than 20 percent protein and 9.5 percent fiber. It has an amino acid balance that makes it valuable in poultry and swine rations. It is also used as a carrier of liquid feed nutrients. Liquid Feed Syrup: It is a highly concentrated feed syrup; high in protein and energy. This product is typically added to enhance an animal feed ration. 2. OUR BUSINESS MODEL Maize has multiple uses both for domestic as well as industrial purposes. The usage pattern as seen earlier in the report varies for human direct consumption to industrial chemical production mainly in the form of ethanol/alcohol. Since maize is a multi-seasonal crop i.e. it is harvested in both the season of rabi and kharif so we have the liberty of designing a business which has the capacity to consume maize throughout the year. When we worked out the financials for the main industries based on maize , we found out that out of ethanol, starch and poultry feed businesses the most profitable are poultry-feed from maize and ethanol from maize stover. So we would we making ethanol from stover and poultry feed from the maize, in this way we would be utilizing whole of the maize plant material and providing the farmers with a much better returns that what they are getting at present. Product Cost incurred(Rs. Per tonne) Revenues(Rs. Per tonne) Profit(Rs. Per tonne) Maize(whole) 9000 10500 1050 Poultry feed 9400 12000 2600 Starch 10000 12000 2000 In the initial phase we propose to use the maize stover (the left out part of the plant after the grains are removed) for the production of fuel grade ethanol which is procured by the government oil marketing companies under a contractual basis at pre-determined prices set by them. The maize grains are stored in silos which could be sold post-harvest season when the prices goes up by 20-30% ever year, which is evident from the price variation cycle shown above (fig 3). Presently we are using maize stover as raw material but straw of other crops like wheat, rice and millets having cellulose content can also be used as starting material in ethanol production. If we ever face shortage of maize stover in our plants capacity utilization then we can procure other raw materials from the same farmers. The location which we are planning to setup our plant is in the Dhaod district of Gujarat. This area has the highest maize production in the state along with the bordering areas of Madhya Pradesh. This is geographically near to the industrial areas of Vadodra and Ahmedabad, which are large consumers of starch and bio-fuel ethanol (As large oil refineries operate near Vadodra so we would not be having any problem in selling the ethanol in markets. And starch based industries are located in and around Ahmedabad which consumes starch in large quantities). The procurement of maize along with Stover would lead to an increase in the working capital requirement but that would be offset by the increased revenues from the sale of that maize. Also the solid matter that would be left out as an affluent during the fermentation process would be useful as feedstock material. The carbon dioxide produced will be sold as industrial CO2 which will make the whole process of ethanol processing a clean development process, with zero carbon emission. As depicted in the table 1 below, total cost/litre of ethanol is lowest from maize stover for equal amount of raw material consumed. Input Procurement (Rs/ton) Enzyme Cost (Rs/ton) Ethanol Yield (Litre/ton) Total Cost (Rs/Litre) Sugarcane 640 Negligible 72 9 Maize 8500 Negligible 450 11 Maize Stover 2000 700 300 7 3. ETHANOL FROM MAIZE STOVER 3.1 Customer value proposition: Our main customer is government that would be procuring ethanol from our plant. The customer value that we are creating is the availability of ethanol throughout the year for successfully implementing the E5, E10 and gradually E20 grade ethanol. The ample amount of availability would help in reducing the dependency on imported fuel that we are consuming right now. Also mixing of ethanol into diesel reduces emission from vehicles as it has higher per cent age of oxygen in it. There is a huge deficit of around 650m litres of ethanol for blending in diesel. The bio-fuel policy of India, states that by 2017 the country should fully implement the E20 standards for EBP. E20 means blending 20% ethanol in the diesel, but at present ethanol is not sufficient for even meeting the E5 standards. As the production of fuel ethanol comes under the category of bio-fuel as defined by the ministry of non-renewal energy, government of India, so we would be eligible for a 25% rebate on capital investmen t. 3.2 Demand and Supply of Ethanol : When will the oil run out? Various estimates put this anywhere from 20 years from now to less than a century in the future. The shortfall in energy might eventually be made up by developments in nuclear fission, fuel cells and renewable energy sources, but what can substitute for gasoline and diesel in the internal combustion engine powered vehicles that will continue to be built worldwide till then? Hence the bio-organic chemists have begun to crystallize, unlocking the vast chemical larder and workshop of natural microbes and plants to invent the technologies required for industrial-scale production of bio-ethanol . Maize accumulates starch that can, after hydrolysis to glucose, serve as the substrate for ethanol fermentation. Maize starch is a more expensive carbon substrate for bio-ethanol production, but if maize stover is used as starting material for ethanol production then it is economically more viable. The product has a potential rival in the form of bio-hydrogen which coul d provide the only workable solution to meeting global energy supplies and mitigating carbon-dioxide accumulation but it is still in a nascent stage. Globally, ethanol has been used as an automotive fuel since the early 1900. However, the usage of ethanol as fuel gained momentum only after the 1970s with the launch of the Pro-alcohol programme in Brazil. Until 1975, the year of the launch of the Pro-alcohol programme in Brazil, the ethanol market was predominantly beverages and industrial. Thereafter, the fuel ethanol market grew substantially and it accounted for 80 % of the world ethanol production in 2010. The global ethanol industry with 19,227 mn gallons of production during CY09 has grown substantially over the years due to the focus on bio-fuels. During the period of 1975-2009, the global production of ethanol grew at a Compounded Annual Growth Rate (CAGR) of 11.86%. The rising crude oil prices, coupled with the increasing quest for energy security and reducing green house gas emissions have fuelled the global ethanol industry. The United States of America and Brazil are the two major ethanol producers across the globe. These two countries together accounted for almost 89% of the total global ethanol production in 2009. The fermentation route using sugary or sugar-yielding material and yeast has been in practice in India since long for the production of alcohol or Ethanol. Most of the Ethanol produced (almost 95%) is through the fermentation route. Grains like rice, corn or maize, barley-malt, rye, wheat, sorghum etc., starchy bulbs and vegetables like cassava (tapioca) and potatoes are commonly used for producing ethanol under the fermentation route in India. In India, ethanol is mostly produced from molasses obtained during the process of crushing sugarcane. 3.3 Classification of ethanol: Ethanol can be classified on the basis of uses, production route and on the basis of composition: 1. On the basis of the uses, it can be classified as beverage ethanol, industrial ethanol and ethanol fuel: a. Beverage Ethanol: ethanol used in alcoholic spirits such as vodka and shochu. b. Industrial Ethanol: ethanol used as a feedstock for alcohol-based chemicals such as paints and inks. c. Ethanol fuel: ethanol used as an automotive fuel (can be used for blending with petrol). 2. On the basis of the production route ethanol can be classified as fermented ethanol and synthetic ethanol. 3. On the basis of the composition, ethanol can be classified as hydrous and anhydrous. (Hydrous ethanol contains about 5% of the water content whereas anhydrous ethanol contains 0.5% of the water content) Year Petrol demand Mt Ethanol blending requirement (in metric tons) Diesel demand Mt Biodiesel blending requirement (in metric tons) @5 % @10% @20 % @ 5% @10% @20% 2006-2007 10.07 0.50 1.01 2.01 52.32 2.62 5.23 10.46 2011-2012 12.85 0.64 1.29 2.57 66.91 3.35 6.69 13.38 2016-2017 16.40 0.82 1.64 3.28 83.58 4.18 8.36 16.72 3.4 Process description The maize stovers are generally harvested during the month of September October in kharif season maize and in March- April for Rabi season maize. The maize stovers can be kept in the open after the harvest as the requirement is round the year in the factory. But the use of concrete slabs over which the stovers are kept will be a good option to minimize the spoilage. Sometimes the polythene sheets can be used to prevent spoilage from rainfall. The requirement of the stovers is 1000 MT/day. 1. Washing of the stovers: The first process in the factory is the washing of the stovers to remove the dust, soil etc. The water is sprayed on the stack of stovers in high pressure and thus the soil and other solid particles are removed. 2. Pretreatment Hydrolysate conditioning: After washing of the stovers they are sent for pretreatment. By this process most of the hemicellulose parts of the stovers are converted into soluble sugars like xylose, mannose, arabinose, and galactose using dilute sulfuric acid at high temperature. After reaction there is formation of aldehydes which is over limed by adding lime, the pH raise to 10 and thus gypsum is formed which is filtered out and the hydrolyzate is mixed with the solid before sent to saccharification and co-fermentation. 3. Presteamer at low pressure: Before sending to the reactor the pretreated stovers are passed through the steam at low pressure to remove the non-condensable that can take up space in the reactor. The low pressure steam is passed by the valve for 20 minutes and then the stover is flash cooled and sent to the reactor. 4. Reactor: In the reactor first the stovers are steamed and then the acid is added to the reactor. Before adding the acid to the reactor the concentrated acid is diluted. 5. Saccharification and co-fermentation: These are two different processes: i. Saccharification In this process the cellulose is converted to glucose with cellulose enzyme. It is a collection of enzymes and comprises of endoglucanase, exoglucanase and beta-glucosidase. Trichoderma reesei is the bacterium which is used for the commercial production of enzyme cellulase. The whole process takes 24 hrs. ii. Co-fermentation The formed glucose and other sugar is fermented to form ethanol. The bacteria used in this step are Z. mobilis which acts as a biocatalyst and will ferment glucose and xylose in ethanol. This whole process takes 36hrs. 6. Distillation, dehydration, evaporation and solid liquid separation: Distillation is accomplished in two columns the first, called the beer column, removes the dissolved CO2 and most of the water, and the second concentrates the ethanol. Fermentation vents (containing mostly CO2, but also some ethanol) as well as the beer column vent are scrubbed in a water scrubber, recovering nearly all of the ethanol. The scrubber effluent is fed to the first distillation column along with the fermentation beer. The leftover liquid and the slurry are sent to the waste water treatment plant from where the water is recycled for further use. 3.5 Financials of ethanol production We have a total installed capacity of 90000 tonnes per annum, of which the capacity utilization in the initial years would go up from 50% to 90% in the subsequent years. The fixed cost is 50crores which is 39% of the total investment required. Raw material cost is 43% in the first year of the total investment. Warehousing cost and other variable costs including that of salaries and transportation, etc. amounts to 3% and 8% of the total cost respectively. The profit after tax in the first year of operations totals to around 24crore. The break-even point is achieved in the second year of operations Year % 2011 2012 2013 2014 2015 Installed Capacity (ton/year) 90000 90000 90000 90000 90000 Capacity utilisation 50% 60% 70% 80% 90% Ethanol production(ton/year) 45000 54000 63000 72000 81000 Price(Rs/ton) 24000 24000 24000 24000 24000 Revenue( Rs in Crore) 108 129.6 151.2 172.8 194.4 ( Rs in Crore) Fixed Cost 39 50 Raw Material 43 55.5 66.6 77.7 88.8 99.9 Warehousing 3 3.6 3.6 3.6 3.6 3.6 Transportation 1 1.7 2.0 2.4 2.7 3.0 Direct Labor 2 2.1 2.1 2.1 2.1 2.1 Admin Costs 1 0.7 0.7 0.7 0.7 0.7 Energy Costs 2 2.3 2.7 3.2 3.6 4.1 Waste Disposal 1 1.1 1.1 1.1 1.1 1.1 Other V.C 8 11.5 12.2 13.0 13.8 14.6 Total Cost 128.4 91.1 103.8 116.4 129.1 Benefit Cost -20.4 38.5 47.4 56.4 65.3 4. MAIZE STARCH PROCESSING: Maize is generally processed to manufacture Maize starch by wet milling method the world over. The by-products of starch manufacture, like Maize oil, Maize steep liquor, gluten etc. are the important value added products. The average processing capacity of the units in India is 200 MT of maize / day. There are plants with as high crushing capacity as 400 MT/day. However, there is no plant in the country with crushing capacity of less than 100 MT/ day. The selection of technology is very important as regards to the viability of the unit is concerned. Critical Factors in setting up a maize processing plant include Raw Material, Land, Water, Steam, Technology and an Effluent treatment plant. A plant of 100 MT of wet milling maize crushing capacity per day is considered as a minimum viable unit. A unit of this capacity will produce the following products. The plant will function in 3 shifts per day and 8 hour per shift. Keeping in view, the nature of activity the capacity utilization of 50%, 70% and 90%, during first, second and third year onwards can be achieved easily. The project cost for setting up of a 100 MT wet milling of maize per day has been assessed at Rs. 14.32crores (Refer to Annexure 4 for details.) 5. POULTRY FEED FACTORY The poultry feed plant of the capacity of 30000 tons/year. The total capital investment is about Rs.60lacs. In the first year the expected revenues are around 18crores, this is at the annual capacity utilization of 50%. The PAT is 2.63crore and the NPV of the project comes out to be 18.93crore at the discount rate of 15% per annum. (Refer to annexure 3 for details). 6. ECONOMIES OF SCALE, SCOPE AND INTEGRATION Economies of Scale: Producing Ethanol from Corn at low levels is not financially viable. We need to increase the production levels for a sustainable and a profitable business. Therefore the Economies of Scale have to be high but they are still comparatively less than other Manufacturing industries. It relies heavily on the cost of corn and other energy inputs. High Economies of scale helps us in reducing transportation as well as Marketing costs. Economies of Scope: Maize oil, Gluten Feed, Gluten meal, Starch and Ethanol can be produced through wet milling method. Ethanol is produced from corn stover. Starch can be used for producing various other products. Producing Ethanol from Corn at low levels is not financially viable. We need to increase the production levels for a sustainable and a profitable business. Therefore the Economies of Scale have to be high but they are still comparatively less than other Manufacturing industries. It relies heavily on the cost of corn and other energy inputs. High Economies of scale helps us in reducing transportation as well as Marketing costs. Economies of Integration: Forward integration involves processing of maize stover to produce ethanol. Wet milling of maize is done to produce starch. Maize can also be used to produce poultry feed. 7. RISKS INVOLVED: Supply Side Risks Price Impact on Input Cost: At this point, ethanol plants are dependent on a constant supply of maize for their survival in fuel production. This gives the supplier the ultimate industry power until we achieve alternative feasible sources. The elasticity of demand is inelastic in most cases, or at least until the price of corn rises to the point where ethanol plants would be very unprofitable in production. The price is given for the input and we don t have much choice in refusing because ethanol plants need to run at as close as possible to capacity in order to be most efficient. In this scenario, ethanol will be passed off at a higher price, but also the ethanol plants will eat some of the cost in order to stay competitive. Demand Side Risks Government Policy: Right now Government offers incentives to blenders who buy from Ethanol plants; in case there is any change in policy there could be a decrease in the demand of ethanol from blenders. Government currently does not allow companies to import ethanol from foreign market to meet their domestic requirements, in case there is any change in this policy there could be a decrease in demand of ethanol from various ethanol plants in our country. Competition: With increase in competition, the supply demand gap currently in the market will decrease, which will lead to less demand of ethanol from various plants. Competition exists in the form of ethanol produced from Jatropha and other plants. 8. PORTER S 5 FORCE ANALYSIS OF THE INDUSTRY 9. VALUE ADDITION Value can be added to the product by form, place and time. In our case we are producing ethanol from maize stovers. The different value additions in our project are- 1. By form We are processing maize Stover, which has very less economic value to the farmer and converting it into ethanol. The value is added by processing cheap maize Stover to ethanol, which has high price and demand. Thus by processing, the form is changed leading to value addition in the produce. We would be using the maize grains for production of poultry feed which is found out to be a viable option. 2. By place We are adding value to the Maize stover by taking it from the farms to the factory gate. The stover in farms does not fetch much value but once it reach to processing unit, it can be converted into ethanol, which is more valuable. We are also procuring maize grains from the farmers and selling it in the market, where, we can fetch comparatively more value. 3. By time We are procuring maize grains during the harvesting season when prices are normally low. The grains will be then stored for the period of four months and afterwards sold at higher prices. Thus storing the maize for some time will provide us comparatively more value. 10. SOCIAL IMPACT 1. By procuring Maize Stover from the farmers, which is otherwise has a low economical value to them, we are providing with the additional source of income to the farmers. The additional benefit to the farmers is expected to be around Rs.2000-2500 per acre . 2. The ethanol produced by us finds its use as the additive in petrol. The addition of ethanol will reduce the emission of green house gases proportionately, thus our product is eco-friendly. 11. SCOPE OF CO-OPERATIVE The back bone of our business model is the continuous supply of maize throughout the year. In order to attain maximum utilization capacity of the plant we need a high and undisruptive supply. The location where the plant would be set is surrounded by villages indulged in rain fed agriculture practices, and they are our raw material suppliers. These types of practices are risky for our business model, so in order to abate the risk Cooperative could be formed. This will help the farmers to reap benefits of the cooperatives. Cooperative will also ensure un-interruptive maize (also Stover of other plants) supply to our plant. This cooperative model would not be maize specific. Backward integration will be done if the results would be as per expectation in the starting years.

Dozier a

1. Evaluate each of the different alternatives. Justify your assumptions and argue which is the best one for Dozier. After their bid was accepted, Dozier has three options to choose from. Of the three choices, the 1st alternative yields the most profit. However, the profit from alternative 1 cannot be guaranteed, and it is much more volatile. The company wants to expand its market to the U. K. and also guarantee the profit (while minimizing exchange risk). Therefore, alternative 2, which has a higher profit margin than alternative 3 is the best hedging choice for Dozier. Alternative 1Alternative 2 Alternative 3 Dollar value of the balance $1,505,086. 88 $ 1,501,438. 5 $1,493,995. 00 Dollar value of the contract $1,677,311. 33 $1,673,663. 00 $1,666,219. 73 Total cost $1,642,783. 00 $1,642,783. 00 $1,642,783. 00 Profit $34,528. 32 $30880 $ 23,437. 00 Percent of Profit 2. 10% 1. 88% 1. 43% Cost of Hedge N/A -1. 20% -1. 70% The detailed calculation is shown below. Alternative 1: Do Nothi ng Dozier would choose to remain unhedged, and expose itself to currency risk. We assume the company will exchange the 10% deposit into dollars and deposit into the U. S. anks directly. The company can obtain interest revenue from this part of deposit. The spot pound rate in U. S. dollars on January 14 is 1. 437. The company can get ? 117,500 ? 1. 437 = $168847. 5 when they exchange the deposit. Three-month deposits interest rate in the U. S. is 8% annually. Therefore, the interest rate would be 0. 08/4=2%. The company can get $168847. 5 ? 1. 02 = $172224. 5 from the 10% deposit. The company will receive GBP 1. 0575 million on April 14,1986. The exchange rate on April 14 remains unknown. However, the pound has weakened over the previous six weeks.CFO, Rothschild was also concerned that the value of the pound might depreciate even further during the next 90 days. We can set three possible rates with different possibilities. According to Exhibit 5, the 3-month forward rate is 1. 4198. This is the scenario that has the highest probability of occurring in the future because it is the most reasonable spot rate on April 14. This is the base case from which to measure the other two alternatives. We can also run the regression (see appendix, graph 1) on the recent eight weeks and get the exchange rate on April 14, as the worst case.Another regression can be run based on the half year exchange rate (see appendix, graph 2). This case can be set as the best one which shows long term data. Receivables Exchange Rate Revenue Probability Base Case ?1,057,500 1. 4198 $ 1,501,438. 50 50% Worst Case ?1,057,500 1. 3617 $1,439,997. 75 25% Best Case ?1,057,500 1. 4917 $1,577,472. 75 25% The total expected revenue from receivables would be: Base Case Revenue ? Probability + Worst Case Revenue ? Probability + Best Case Revenue ? Probability = 1,505,086. 88. Therefore, Revenue from Receivables $ 1,505,086. 88 Revenue from Deposit $172224. 45Total Expected Revenue $ 1,677,311. 33 Tota l Cost $1,642,783. 00 Profit $34,528. 32 Percentage of Profit 2. 10% We can also perform break-even analysis here. The exchange rate would be 1. 3906 when the profit is zero. Therefore, if the pound depreciate to 1. 3906, the company would suffer a loss for this contract. Alternative 2: If Dozier sells pounds forward 90 days Dozier would incur an obligation to deliver pounds 90 days from 1/14/86 at the rate of 1. 437. This would ensure that Dozier would receive a certain amount of money, regardless the change of exchange rate. The 3-Month Forward Rate in U. S.Dollars on 1/14/86 is 1. 4198 and the balance is GBP 1. 0575 million. Thus, Dozier would receive 1. 4198 ? ?1. 0575 million = $1501438. 5 after three months. As we discuss above, the company can get 168847. 5 ? 1. 02 = $172224. 5 dollars from the 10% deposit. Therefore, the actual revenue of the contract is 1501439 + 172224. 5 =$1673663. The total cost is $1642783. Thus the profit is 1673663 – 1642783 = $30880. The perce nt of profit is 30880/1642783 = 1. 88% If the rate remains the same as 1. 437, the rest pounds has the value of 1. 437 ? ?1. 0575 =1519627. 5 million. The cost of hedge is (1501438. 5 – 1519627. )/1519627. 5 = -1. 2% Alternative 3: If Dozier secures a 90-day pound loan Dozier can also do a spot hedge, which worked similarly in that it also created a pound obligation 90 days. Dozier would borrow pounds from bank and exchange the proceeds into dollars at the spot rate of 1. 4198. Dozier would use its pound receipts, ? 1. 0575 million, to repay the loan. The rate of loan would be at 1. 5% above the U. K. prime rate. Since the loan rate for three months is (1. 5% + 13. 5%)/4=3. 75%, Dozier could receive ? 1. 0575 million/ (1+3. 75%) = ? 1019277 on 1/14/86. Then he would exchange them to dollars.With the spot transaction at 1/14/86, Dozier would get ? 1019277 ? 1. 437 =$ 1464701. 2 on 1/14/86. To get more profit, Dozier would deposit dollars. At end of three months, they would rec eive $ 1464701. 2 ? (1+8%/4) = $1493995 for ? 1. 0575 million. As we discuss above, the company can get 168847. 5 ? 1. 02 = $172224. 5 dollars from the 10% deposit. Thus, the actual revenue of the contract is 1493995 + 172224. 5 =$1666219. 73. The total cost is $1642783. Ergo the profit is 1666219. 73 – 1642783 =$ 23437. The percent of profit is 23437/1642783 = 1. 43%. The cost of hedge is (1493995 – 1519627. 5 )/1519627. = -1. 7% 2. What is the relation between the forward rate,the spot rate and the interest rates in the US and the UK? Below are the formulas from the suggested reading. It can show the relationship between the forward rate,the spot rate and the interest rates. Forward rate in U. S. : Forward rate in U. K. : If we divide forward rate in U. S. by forward rate in U. K. , we can get formula below: Generally, the relationship between currency spot rates and futures rates are based on interest rate parity, in which the exchange rate is determined by the rela tive interest rates, and the expected future spot rate.From the formulas above, we can see that if the US risk-free rate is less than the British pound rate, the futures exchange rate will be less than the current spot exchange rate. Relative to the spot rate, the forward rate tells you whether interest rates in one currency are higher or lower than those in the other currency. The international Fisher effect suggests the currency of the country with the higher nominal interest rate is expected to depreciate against the currency of the country with the lower nominal interest rate, as higher nominal interest rates reflect an expectation of inflation. 3.Are there alternative ways for Dozier to protect itself from currency risk? Yes. There are five alternatives for Dozier to protect itself from currency risk. First, Dozier could offset the pound exchange risk by hedging with options. Calls would be used if the risk is an upward trend in price, while puts are used if the risk is a downw ard trend. If the risk was a depreciation of the pound, Dozier would need to buy put options on pounds. If pounds were to depreciate at the time Dozier receives its pound revenue, then Dozier would exercise its right and thereby effectively obtain a higher exchange rate.However, if the pound was to appreciate instead, Dozier would then let the contract expire and exchange its pounds in the spot market at the higher exchange rate. The options market allows traders to experience unlimited favorable movements while limiting losses. This feature is unique to options, unlike the forward or futures contracts where the trader has to forego favorable currency rate movements, plus there are also no limits to losses. The advantages of options over forwards and futures are the limited downside risk and the flexibility and variety of strategies made possible.Also, in options there is neither the initial margin nor the daily variation margin since the position is not marked to market. This relie ves traders from potential cash flow problems. Options are however, more expensive because they are much more flexible compared to forwards or futures. The option price is therefore its disadvantage. Another alternative for Dozier to protect itself from currency risk would be to use profits generated in British pounds to buy durable goods which are then sold in the US in dollars. For example, British beer.Presumably, the beer industry has a low beta since most people are going to drink, regardless of economic standings. There may even be a tendency for people to drink more during hard economic times. If Dozier were to purchase British beer in pounds, the value would be retained when resold in the US, thus protecting the firm from exchange risk. The primary cost associated with this may be tariffs and other taxes on imports to the U. S. Third, similar to the alternative above, Dozier could direct profits earned in British pounds into other U.K. investments. From the case, it is belie ved that the company wants to continue its international growth. The company can use the profits earned to expand the overseas market. Holding a large portfolio of international units can in the long run, reduce unsystematic risk isolated in the U. S. Fourth, because the pound might depreciate further during the next 90 days, Dozier can accelerate the completion of the project to offset currency risk (predicted depreciation of the pound) by collecting payment prior to the agreed upon date.Finally, the company can benefit from currency swap. It is a foreign-exchange agreement between two institutions to exchange aspects of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency. Currency swaps are motivated by comparative advantage. For instance, if Dozier needed to acquire pounds and a U. K. company needed to acquire dollars, these two parties could arrange to swap currencies by establishing an interest rate, an agreed upon amount, and a maturity date.These currency swaps are negotiable for at least 10 years making them a very flexible method of foreign exchange. Additionally, since swaps are considered a foreign exchange transaction, they are not required to be listed on a firm’s balance sheet. 4. Should Dozier diversify its currency risk? Does it have a comparative advantage in remaining unhedged? Yes, controlling the currency risk is an important instrument for controlling and improving performance of international investments. In remaining unhedged Dozier may not necessarily have an advantage.While option 1 was calculated to be the most profitable, this depends on the exchange rates remaining relatively high. The exchange rates will fluctuate. The value of the dollar could increase or the pound could decrease leading to losses. If it goes below 1. 3906, the company would suffer a loss. It is the first time that Dozier is expanding into a foreign country. For Dozier to continue to expand into foreign ma rkets, it is essential that cash flows are generated. Hedging offers Dozier exchange rate risk protection in the vent the value of the British pound falls. It would eliminate the risk and guarantee the necessary cash flows. For the same reasons however, it may be Dozier’s best interest to remain unhedged. If they already planned for a 6% profit margin, exposing themselves to more risk may be the only way to get a this return. A riskier, unhedged position may be further incentivised by a principal agent problem between Rothschild and the CEO. It is not explicitly stated, but as the CFO, Rothschild’s job may be on the line if he does not perform.Therefore, the added risk in order to cover for past 6 week’s exchange losses may be his last hope. It will not cost him any more to take on the additional risk if he is already facing a high probability of losing his job. Agency costs aside, the question boils down to this: Is a high probability of a small profit better t han a small probability of a big profit. Considering this is their first international project, it might be best to go with what is certain, taking small steps, and learn from their mistakes going forward into future projects. Appendix Graph 1 Graph 2

Underrated Questions on Argumentative Essay Samples for Gre

Underrated Questions on Argumentative Essay Samples for Gre In the debut, that is the very first paragraph of the essay, Myrtle will want to spell out the matter and state her position. For your debate to be a strong one you always need to double check to see whether there are enough data and information which can back up your viewpoint. An excellent argument is a basic numbers game with a crystal clear winner. A decent persuasive argument will use the latest data and data from verified sources. The Hidden Gem of Argumentative Essay Samples for Gre Even when you're writing an informative essay, it's still true that you have the job of attempting to convince your audience that the info is essential. Even if you're a specialist in a particular field, don't be afraid to use and cite external sources. Our crew of professional writers with the crucial experience and writing skills is always prepared to fulfill your demands and exceed your expectations. It's completely understan dable to look for help if you don't have sufficient time or skills. The Start of Argumentative Essay Samples for Gre Utilizing the above mentioned criteria as a simple guideline should permit a writer to locate an appropriate topic. It is essential that the thesis statement ought to be slimmed down as a way to adhere to the guidelines of the given writing exercise. It is preferable to use templates since they include all necessary formatting elements. By now you're probably eager to find an exemplary argumentative essay outline template. Inspiration to make your own advertising or media argumentative essay topics isn't really hard to discover. Then take a look at a list of argumentative essay advice to help you begin. A manageable topic is one which can be successfully performed within the page demands of the essay. At times you might require some expert help with argumentative essay topics. The New Angle On Argumentative Essay Samples for Gre Just Released An outline is an excellent tool to remember what you're planning to write about and to prevent a fear of getting started. You will then have to approach this issue by gathering, generating, and evaluating credible sources to back up your evidence. Also, you may use our example to compose your further tasks as you would get an ideal model to base your work on. An argumentative essay example will reveal the should possess some crucial components which make it better in the practice of convincing. So How About Argumentative Essay Samples for Gre? In summary, an argument essay has to be logical from starting to end. An argumentative essay presents either side of a problem. It is a type of essay that presents arguments about both sides of an issue. A superior argumentative essay ought to have a particular statement that's arguing. Moral argumentative essay topics are a few of the simplest to get carried away with. Then you need to endeavour to choose an appropriate argumentative essay form at. Argument essays can be organized in a number of means. The conventional five-paragraph essay is normal in writing argumentative essays, but it's only one method to write one. Recent argumentative essay topics that are related to society is going to do. An argumentative essay is among the many academic essay types. Every argumentative essay ought to be based on a topic which can be debated. It is very important to remember an argumentative essay and an expository essay could be similar, but they vary greatly in regard to the sum of pre-writing and research involved. When you're picking your topic, remember that it's much simpler to write about something which you presently have interest ineven in case you don't know a good deal about it. Put simply, you want to attempt to comprehend where they're coming from. If you would like to learn what an argumentative essay is, the very first thing you ought to remember is that its principal aim is to convince the audience to accept your standpoint. At some stage, you're likely to be requested to compose an argumentative essay. Argumentative essay topics are so important since they are debatableand it's esse ntial to at all times be critically contemplating the world around us. Essentially anything that should be understood before reading the remainder of the essay is background info, and ought to be included in the introduction. An argumentative essay is a writing piece intended to persuade a person to believe the way that you do. The primary reason why somebody is writing an argumentative essay is to make an effort to persuade or sway another individual or perhaps a group of men and women in your rightness in a particular theme. It's also wise to remember to remain unbiased and objective. You may have a look at the further information on how best to compose an eye-catching essay introduction with a hook. The structure of your paper's outline is just like the structure of your whole essay. You don't need to find super technical with legal argumentative essays, but don't forget to do your homework on what the recent laws about your favorite topic actually say. It is very import ant to check reviews about essay writing services in order to be confident they can deliver your task before the deadline. Writing about widespread problems like national or global problems is often unmanageable in only two or three pages. Make certain to read online essay writing service reviews in order to know what type of material you are spending for. Argumentative essays utilize logic, facts, and reasoning to find out the victor. A great argumentative essay is going to be based on established or new research in place of only on your ideas and feelings. Besides, keep in mind that the secret to a prosperous argumentative essay is in finding good evidence to back up your opinion. Whether it's an argumentative or expository essay which you're writing, it is crucial to develop a clear thesis statement and a crystal clear sound reasoning. Argumentative Essay Samples for Gre Features An argumentative essay requires you to choose a topic and have a position on it. You need to have the strong personal opinion on this issue you intend to discuss in your argumentative essay. It isn't a must, but should you care about your topic, it is going to be resembled in your writing. Researching the topic will permit you to find out more about what fascinates you, and should you pick something you truly like, writing the essay will be more enjoyable. It's crucially important to completely engage yourself in the subject you will write. Your topic ought to have the potential to provide you enough arguments for your essay. A debatable topic is one which has differing viewpoints. Pick the topic you're already acquainted with.

Feminism And The Post Modern Structure Of The 21st Century

The concept of gender has been something debated by many intellectuals across centuries. Gender roles in particular, are hotly debated and are ever present in today’s society, thanks to the rise of feminism and the post-modern secularised structure of the 21st century. Whilst it’s a very relevant question today, the question also carries huge importance through the years, perhaps even as far back as the 1600s with the first publication of Genesis, through to the 20th century with works such as Doctor Faustus. To begin with, in Genesis, God â€Å"created man in his own image, in the image of God he created him, male and female he created them.† This initial favouritism for the male race is important in answering the question as to whether gender does intact define character, as the omnipotent benevolent figure God has chosen to make a man in his own image, therefore granting man a higher status of importance amongst others. This has pioneered the way in which we view men and women in society from the 1600s through to 2015, and has allowed for men to be at the top side of a power imbalance. In terms of defining character, this creates men to be dominant, leaders and decision-makers whereas women are nurtured into being submissive and obedient. Furthermore, the linguistic construction of the word â€Å"female† is also a demonstration of just how much women are second-rate to men. The word presents itself with ‘fe’ as an extension of ‘male’ which can be interpreted to imply the ideaShow MoreRelatedHow The Changes Towards Marriage And Family Life Essay1203 Words   |  5 PagesThe family structure in the UK has changed dramatically over the past 100 years. Society is ever-evolving and certain issues are generally more accepted now than they were previously. I am going to focus on the changes towards marriage and family life. 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