A trader short sells a share currently worth $16 and invests the payoff in a bank. In the Cox-Ross-Rubenstein notation this share has up factor u= 1.07 and down factor d=1/u and the return on an investment over one time-step is R= 1.04.

After one time-step the trader returns the short sold share to the original owner and also withdraws the bank investment plus interest. Say the trader makes a profit on this investment. What is the trader's profit?