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Buffelhead's stock price is $220 and could halve or double in each six-month period. A one-year call option on Buffelhead has an exercise price of

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Buffelhead's stock price is $220 and could halve or double in each six-month period. A one-year call option on Buffelhead has an exercise price of $165. The interest rate is 21% a year. Assume the option is American and that at the end of the first six months the company pays a dividend of $25. (Thus, the price at the end of the year is either double or haif the ex-dividend price in month 6) a. Calculate the value of the Buffelhead call option. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the value of the Buffelhead call option if it were European-style. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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