The current price of copper is 95 cents per pound. The annual volatility for copper prices is
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The current price of copper is 95 cents per pound. The annual volatility for copper prices is 20 percent, and the risk-free rate is 5 percent. In one year, you have the option (if you want it) to spend $1.25 million to mine 8 million pounds of copper. The copper can be sold at whatever the copper price is in one year. It costs 85 cents to extract a pound of copper from the ground. What is the value of this situation to you?
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Microsoft Excel Data Analysis And Business Modeling
ISBN: 9780137613663
7th Edition
Authors: Wayne Winston
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