Calculate the value of the option

Reference no: EM1354370

The opportunity to invest in a project can be thought of as a three-year real option that is worth $450 million with an exercise price of $700 million. Calculate the value of the option given that, N(d sub 1)= 0.35 and N(d sub 2)= 0.2. Assume that the interest is 6% per year.

a. $150 million
b. $33.33 million
c. Zero
d. None of the above

Reference no: EM1354370

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