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Use a Binomial Tree to Value the Following Option

Question 19

Multiple Choice

Use a binomial tree to value the following option. Assume rf = 0.04, rp =0.12, σ = 0.35, E(CF1) = $30, and cost = $300. What is the value of this project option?


A) $40.74
B) $50.60
C) $55.32
D) $62.12

Correct Answer:

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