On May 25, 2018 you purchased an option which will allow you to sell a commercial building on August 14, 2022 for $42 million. Your current estimate of the value of the commercial building is $38...

On May 25, 2018 you purchased an option which will allow you to sell a commercial building on

August 14, 2022 for $42 million. Your current estimate of the value of the commercial building

is $38 million. The annual volatility for the change in the commercial building’s value is 57% and

the risk-free rate is 6%.

What type of option is this?

b. Calculate the value of the option to sell the commercial building.

Please show work using excel

Jun 05, 2022

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