On January "the spot price of oil is €110 per barrel and the futures price for delivery in three months is €108 per barrel. Each contract is for delivery of 10 barrels of oil. A manufacturing firm in Cork wants to hedge its purchase of 50 barrels of heating oil in three months time. The manufacturer hedges by going long 4 futures contract. On April 1" it closes its futures position and purchases heating oil in the spot market. The April 1" futures price is €112 per barrel and the spot price is €113 per barrel.
What is the effective purchase price that the manufacturer pays for heating oil?