l. Ignore taxes, transaction costs, and other imperfections for the problem. a. You own a piece of land that is currently unused. Similar lots have recently sold for $4 million. Over the past ve years, the price of land in the area has increased by 8 percent per year, with an annual standard deviation of 15 percent. A potential buyer has recently approached you and wants an option to buy the land in the next 18 months for $4.3 million. The risk-free rate of interest is 5 percent per year, compounded continuously. Use the Black-Scholes option pricing model to determine how much you should charge for the option? b. If you wanted the option to sell the land to the buyer in one year. Assuming all the facts are the same, what is the price of the option today