A Farmer Sells 4 Million Bushels of Corn at a Spot

Multiple Choice

A farmer sells 4 million bushels of corn at a spot price of $2.10 per bushel.The total cost of production was $9.2 million.The farmer has an effective tax rate of 25%.If the farmer entered into a futures contract at a price of $2.40 per bushel on 4 million bushels,what is the farmer's net loss or gain?

A) $100,000 loss
B) $800,000 loss
C) $300,000 gain
D) $400,000 gain