Equity Forward Pricing Calculation

A financial analyst is evaluating the pricing of an equity forward contract on a stock that is currently trading at $100. The stock does not pay dividends, and the risk-free interest rate is 5% per annum. The analyst wants to determine the fair price of a 1-year forward contract on this stock.

According to the forward pricing model, the price of a forward contract on a non-dividend paying stock can be calculated using the formula:

Forward Price (F) = S0 * e^(r*T)

where:

• S0 = current stock price
• e = base of the natural logarithm
• r = risk-free interest rate
• T = time to maturity (in years)

If the analyst inputs these variables into the formula, what will be the correct pricing of the forward contract?