DigiTek Corporation has 1 million shares outstanding, currently trading at $110 each share. The standard deviation (o) of DigiTek's stock returns is 35% a year. The risk-free interest rate is 2% per year. Mr. Brian has just become the CEO of the DigiTek at the beginning of this year and been offered an incentive scheme based on the performance of the company's stocks. At the end of next year, Mr. Brian will be paid a cash bonus of $18,000 for every dollar that the company's stock price rises above $130 per share. Consider Mr. Brian's incentive scheme as a financial option. QUESTIONS a a) Is Mr. Brian's incentive scheme a call or a put option? Is it an American or European type option? [2 marks] b) Use the Black-Scholes option pricing model to estimate the value of each option. What is the total value of Mr. Brian's incentive scheme? [8 marks]