B is correct. The relationship between the variables is

$F = \left(S + U\right) * \left[\frac{1 + R}{1 + L}\right]^t$

where S is the spot price, U is the present value of the storage cost, R is the risk-free rate of interest and L is the lease rate.

First, calculate the ratio of $1 + R / 1 + L$which is$.9965 / 1.0225$or `$0.97`46$

Then $F = (5,201 + 65) * 0.9746$ or $5,132$.

• A is incorrect. It uses the equation $F * (1 + L)^t = (S - U) * (1 + R)^t$
• C is incorrect. It uses the equation $F = (S + U) * (1 + R + L)^t$.
• D is incorrect. It uses the equation $F(1 + R)^t = (S + U) * (1 + L)^t$.

Learning Objective: Compute the forward price of a commodity with storage costs.

Reference: Global Association of Risk Professionals, Financial Markets and Products (New York, NY: Pearson, 2023), Chapter 11, Commodity Forwards and Futures