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Again consider the widget investment problem in Section 17.1. Verify that with $S=$ 50, K=$ 30, r=0.04879, sigma=0,$ and $delta=0.009569,$ the perpetual call price is
Again consider the widget investment problem in Section 17.1. Verify that with $S=\$ 50, K=\$ 30, r=0.04879, \sigma=0,$ and $\delta=0.009569,$ the perpetual call price is $\$ 30.597$ and exercise optimally occurs when the present value of cash flows is $\$ 152.957 .$ What happens to the value of the project and the investment trigger when you change $S ?$ Why? What happens to the value of the project and the investment trigger when you increase volatility? Why?
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