1. The current price of a stock is $20, and at the end of one year its price will be either $24 or $16. The annual risk-free rate is 2% (use daily compounding with 365 days/year), based on daily compounding. A 1-year call option on the stock, with an exercise price of $17, is available. Based on the binominal model, what is the option's value? (5 points)