Question 6 (a) After completing your Master's degree, you want to work on an unused ancestral plot of land. You find out other similar plots sell for $1.9 million. Digging deeper, you find out that land prices within the area has increased by 12% per annum, with an estimated standard deviation of 25% per annum. You accidently mentioned this in your corporate finance class, and now one of your classmates wants an option to buy the land in the next 12 months for $2.1 million. The risk-free rate of interest is 5% per annum. If you were to consider this, how much should you charge for the option? [5 marks] (b) Are real options on a risky venture worth more than a real option on a safe venture? [5 marks; Word Limit 200 words]