[bi An option is written over 1,001!) Reliance Limited shares. The option gives the right to buy 1,0013 Reliance shares at a price of $23 per share, on or before. 31st March. It is now the T'th of I Fehmary. Currently a Reliance share can be traded on the stock market at a price of $19.50. The option contract can be sold on the market for $1335. [5} Is this a call or a put option? {it} Calculate the option's exercise price? [iii] Calculate the option'e current premium? [hr] Would you exercise the option now? Why? {v} If on the day of expiry. Reliance Limited shares were trading for $25.40. calculate option pay-off for the holder of the option? [5 marks} Question 1 (10 marks) (a) Telco Incorporated is expected to generate the following free cash flows over the next three years: Year 2 3 Free Cash Flows in 38 25 56 ($m) After this, the free cash flows are expected to grow at the industry average of 5% per year. Telco has $8 million in excess cash, debt of $60 million, 25 million shares outstanding and a weighted average cost of capital of 13%. Use the discounted free cash flow model to estimate Webster's share price