Transcribed Image Text
Gasworks, Inc., hasbeen approached to sell up to 3.4 million gallons of gasoline inthree months at a price of $2.80 per gallon. Gasoline is currentlyselling on the wholesale market at $2.70 per gallon and has astandard deviation of 59 percent. If the risk-free rateis 5 percent per year, what is the value of this option? Use thetwo-state model to value the real option. (Enter youranswer in dollars, not millions of dollars, e.g., 1,234,567. Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) Value of contract$
Other questions asked by students
Medical Sciences
Accounting
Accounting
Accounting
Accounting
Accounting