Chapter 12, Q35

Can you explain what cells in excel to use to put in these formulas (see below screenshot), if the data is as following screenshot:

week price 80 inputs expected annual growth rate annual standard deviation time period initial price option strick price expiration date (week) risk free rate 15% 25% Jan-52 $80 $75 13 6% To simulate the average stock price behavior for the next 13 weeks follows the steps given below: The initial stock price in week zero has be given that is $80. The stock price for the next 13 weeks can be obtained by the function given below: (1+Expected annual growth rate+0.5(Annual S.D.) Time Period Stock price at week 0x +Annual S.D.x PsiNormal(0,1) Time Period The value of average stock price is obtained by the function given below: AVERAGE(Week 0 to 13,2)+ PsiOutput The amount of profit gained is obtained by the formula: MAX(Stock price at expiration date-Option Strile Price,0) + PsiOutput Average of profit can be obtained by the formula given below: E (Profit) = PsiMean(Profit) Assuming a risk free discount rate to be 6%, the amount willing to be paid for this option can be obtained by the formula: ROUND(NPV (risk-free rate/52,0,0,0,0,0,0,0,0,0,0,0,0,E (Profit))+ InitialPrice, 2) week price 80 inputs expected annual growth rate annual standard deviation time period initial price option strick price expiration date (week) risk free rate 15% 25% Jan-52 $80 $75 13 6% To simulate the average stock price behavior for the next 13 weeks follows the steps given below: The initial stock price in week zero has be given that is $80. The stock price for the next 13 weeks can be obtained by the function given below: (1+Expected annual growth rate+0.5(Annual S.D.) Time Period Stock price at week 0x +Annual S.D.x PsiNormal(0,1) Time Period The value of average stock price is obtained by the function given below: AVERAGE(Week 0 to 13,2)+ PsiOutput The amount of profit gained is obtained by the formula: MAX(Stock price at expiration date-Option Strile Price,0) + PsiOutput Average of profit can be obtained by the formula given below: E (Profit) = PsiMean(Profit) Assuming a risk free discount rate to be 6%, the amount willing to be paid for this option can be obtained by the formula: ROUND(NPV (risk-free rate/52,0,0,0,0,0,0,0,0,0,0,0,0,E (Profit))+ InitialPrice, 2)