a. Rework problem 18-4 using the spreadsheet model.

b. Construct data tables for the intrinsic value and Black–Scholes exercise value for this option and graph the relationship. Include possible stock price values ranging up to $30.

c. Suppose this call option is purchased today. Draw the profit diagram of this option position at expiration.

d. Ignore parts a through c to work this problem. At the end of the 6 months, a firm’s stock will be worth $20 or $40. Given the following information, create a risk less hedge to determine the value of the firm’s call option:Current stock price = $25 Exercise price = $30 Option expiration = 6 months Risk-free rate = 5%e. What is the value of the firm’s call option in part d?