Assume that the current one year spot rate is 10%, but the rates are likely to change in the future. The estimate is that u = 0.9 and d = 0.4. Value a straight bond with the following features: it matures in three years, has no default risk, pays a 10% coupon each year, and has $1000 face value. Assuming that the bond is callable, and the call price is $1010 per bond, the price of the callable bond is 321$

Calculate - the value of the call option alone.