You have an option to buy a new plane in three years for $25 million. Your current
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You have an option to buy a new plane in three years for $25 million. Your current estimate of the value of the plane is $21 million. The annual volatility for the change in the plane’s value is 25 percent, and the risk-free rate is 5 percent. What is the option to buy the plane worth?
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To calculate the value of the option to buy the plane we can use the BlackScholes option pricing mod...View the full answer
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Related Book For 
Microsoft Excel Data Analysis And Business Modeling
ISBN: 9780137613663
7th Edition
Authors: Wayne Winston
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