Calculate the Total Cost of Carry, if the Spot price of a commodity is Rs. 28000, Time period is 90 days, Interest rate is 7% and Storage cost is 2%.
Rs. 621.37
The total cost of carry equals the spot price multiplied by the combined carrying rate (interest plus storage) for the holding period: \(C = S \times (r + s) \times \dfrac{t}{365}\).
Here \(C = 28000 \times (0.07 + 0.02) \times \dfrac{90}{365} = 2520 \times 0.246575 = 621.37\), that is Rs. 621.37.
Check: interest alone is \(28000 \times 0.07 \times \dfrac{90}{365} = 483.29\) and storage alone is \(28000 \times 0.02 \times \dfrac{90}{365} = 138.08\); their sum \(483.29 + 138.08 = 621.37\) confirms the total.
So Rs. 483.29 counts only interest, Rs. 138.08 counts only storage, and Rs. 1,400.00 does not follow from the given rates and period.
Hence, Rs. 621.37.
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