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Dear OTA,

Please solve Problems 9-2 ,9-3 , 9-4 and 13-1.

Thanks

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Solution Summary

The posting answers four questions - 1. Flanagan Company - price of stock 2. Purcell Industries - value of option 3. Value of put option 4. Kim Hotels - net present value and decision tree analysis

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9-2. Option's strike price = $15; Exercise value = $22; Time value = $5;
Time Value = Market price of option (V) - Exercise value
$5 = V - $22
V = $27.
Exercise value = Price of the stock (P0) - Strike price
$22 = P0 - $15
P0 = $37
9-3. P = $15; X = $15; t = 0.5(in years = 6months) ; rRF( risk free rate) = 0.06; σ2 (variance)= 0.12; d1 = ...

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