Demonstrate how a one-year European call option can be replicated when K = $50, S(0) = $50 and the stock price in a year can take the value of either $65 or $40. Assume the risk-free interest rate equals 5% on an annualized basis. Find values for d₀ and d_1. Show all steps and calculations. Also, complete the following table and find the price for the call option.

Action today Cash flow today Up scenario payoff Down scenario payoff Borrow So at risk- free rate Buy 81 shares of stock Buy call option