5. Assume the price St of ZM at time t satisfies the log-normal model with volatility 16% and expected rate of return 10%. The spot price is $40. The risk-free rate is 5%. Portfolio Y has the following payoff in 2 years: the payoff is $50 if the price of IBM in 2 years is less than $30 and, the payoff is $25 if the price of IBM is 2 years is more than $30. Compute today's price of Portfolio Y.

a. between 25 and 26; b. between 23 and 24; c. between 22 and 23 ; d. between 24 and 25