Jared Lazarus has just been named the new chief executive officer of BluBell Fitness Centers, Inc. In addition to an annual salary of $557,500, his three-year contract states that his compensation will include 19,500 at-the-money European call options on the companys stock that expire in three years. The current stock price is $31 per share, and the standard deviation of the returns on the firms stock is 55 percent. The company does not pay a dividend. Treasury bills that mature in three years yield a continuously compounded interest rate of 7.5 percent. Assume that Mr. Lazaruss annual salary payments occur at the end of the year and that these cash flows should be discounted at a rate of 11 percent.

A.) Use the BlackScholes model to calculate the value of the stock options. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

B.) Determine the total value of the compensation package on the date the contract is signed. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)