Question: For all questions below, use two-period risk-neutral pricing (as needed) 1. You own a food truck. To operate, you have to buy $2,000 worth of

For all questions below, use two-period risk-neutral pricing (as needed) 1. You own a food truck. To operate, you have to buy $2,000 worth of ingredients and 800 gallons of gasoline, and you will produce $10,000 in sales. For simplicity, assume that all production, sales, costs, etc. happen instantaneously at t=1. - gas price today is $6 per gallon - gas price has = 0.5 - it costs 7% to store gas - r=4% a. Assume you have signed a contract with the city and you have to operate at t=1 no matter what... you have no choices. What is this project worth today?

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