What is the value of the call option, Finance Basics

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What is the value of the call option

Problem

The price of Ervin Corp. stock will either be $69 or $85 at the end of the year. Call options are available with one year until expiration. Continuously compounded T-bills currently yield 2.57 %. Suppose the current price of Ervin stock is $73.

What is the value of the call option if the strike price is $75 per share?

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Finance Basics: What is the value of the call option

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