A financial derivative on a share whose current price is 110 is issued by an investment bank. At expiry in 3 months' time, the derivative will pay f(S) where S is the price of the stock and f(S) = (log(S-105) if S> 105 if S < 105. The annual risk-free interest rate is 6% compounded continuously. The investment bank estimates that, in each month, the stock price is likely to either increase by 5% or decrease by 5%. Use a 3-period binomial model to determine the arbitrage-free price of the derivative.