You Are the Purchasing Agent for a Candy Company

You are the purchasing agent for a candy company. You anticipate that your firm will need 400,000 pounds of milk in March. You decide to hedge your position today and did so at the closing price of the day. Assume that the actual market price turns out to be 12.74 on the day you actually buy the milk. How much more would you have spent or saved if you had not taken the hedge position?

A) You could have saved $160.
B) You spent an extra $160.
C) You could have saved $840.
D) You spent an extra $840.
E) You spent an extra $1,640.