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You own a lot in Savannah, Georgia that is currently unused. Similar lots have recently sold...

You own a lot in Savannah, Georgia that is currently unused. Similar lots have recently sold for $0.5 million. Over the past five years, the price of land in the area has increased 7 percent per year, with an annual standard deviation of 12 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $0.55 million. The risk-free rate of interest is 3 percent per year, compounded continuously. How much should you charge for the option? $9,590.40 $10,456.77 $11,425.80 $12,495.76 $13,334.72

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 7 months ago
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