A variation on question 4: Suppose the land is occupied by a warehouse generating rents of $150,000

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A variation on question 4: Suppose the land is occupied by a warehouse generating rents of $150,000 after real estate taxes and all other out-of-pocket costs. The value of the land plus warehouse is again $1.7 million. Other facts are as in question 4. You have a European call option. What is it worth?

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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