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Madeline Manufacturing Inc.s current stock price is $45 per share. Call options for this stock...

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Finance

Madeline Manufacturing Inc.s current stock price is $45 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $35. These options will expire at the end of 1 year, at which time Madelines stock will be selling at one of two prices $25 or $55. The risk-free rate is 3%. Using the binomial option pricing model, create a riskless hedged investment and answer the following questions:

After the payoffs have been equalized and the riskless hedged investment is created, what is the value of the portfolio in one year? Round your answer to the nearest cent. $

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