What is the current yalue

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A company's board is deciding whether to grant the company's current CED an option to buy one million shares of the company's stock at the price of $18 per share. 'lhe company's stock is currently trading at 52D per share. The option will expire in six years and the owner of the option can have the ?exibility to exercise the option anytime up until [and including} the option's expiration. This option is not transferrable. Assuming that the risk-free interest rate is 1.5% per annum.

a) If the annualized yolatility of this company's stock price is 2096 and the public expects the company to pay one dividend of $5 per share in 5 years time from now and another dividend of $3 per share Tr' years from now. What is the current yalue of this option?

Reference no: EM133112486

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