How much is gained from exercising early at the lowest node, Financial Management

How much is gained from exercising early at the lowest node

How much is gained from exercising early at the lowest node at the 9-month point in Example?

Example:

Consider a 1-year American put option on the British pound (GBP). The current exchange rate (USD per GBP) is 1.6100, the strike price is 1.6000, the US risk-free interest rate is 8% per annum, the sterling risk-free interest rate is 9% per annum, and the volatility of the sterling exchange rate is 12% per annum.

In this case, The life of the option is divided into four 3-month periods for the purposes of constructing the tree, so that In this case, q = r_f and equation gives

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