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Aleks [24]
3 years ago
12

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,260,000. Over the past five

years, the price of land in the area has increased 8 percent per year, with an annual standard deviation of 37 percent. You have approached a buyer and would like the option to sell the land in 12 months for $1,410,000. The risk-free rate of interest is 4 percent per year, compounded continuously. What is the price of the put option necessary to guarantee your sales price

Business
1 answer:
Kamila [148]3 years ago
7 0

Answer:

Explanation:

find the solution below

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Answer:

d.$74,000

Explanation:

The annual average investment is given by the average of the initial investment (144,000) and the scrap value (salvage value = 4,000)

The average investment amount is:

AAI = \frac{144,000+4,000}{2}\\ AAAI = \$74,000

The annual average investment amount used to calculate the accounting rate of return is: d.$74,000

6 0
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nalin [4]

Answer:

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Explanation:

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julsineya [31]

Answer:

co-operative ownership

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Who is affected by our government’s fiscal policies?
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