16. Consider the last rowof Table 1. What is the solution for S and S when...

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16. Consider the last rowof Table 1. What is the solution for S∗ and S

∗ when ks

= kr

= 0?

(This answer does not require calculation.)

In the following five problems, assume that the spot price of gold is $300/oz, the effective annual lease rate is 3%, and the effective annual risk-free rate is 5%.

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