Quantitative Problem:

Madeline Manufacturing Inc.s current stock price is $40 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $30. These options will expire at the end of 1 year, at which time Madelines stock will be selling at one of two prices $25 or $45. The risk-free rate is 3%. Using the binomial option pricing model, create a risk less hedged investment and answer the following question:

After the payoffs have been equalized and the risk less hedged investment is created, what is the value of the portfolio in one year? Round your answer to the nearest cent.

show your work please thank you.