The current price for a non-dividend paying stock is 100. Each year, the stock priceeither goes up by 25% or down by 25%. The yield curve is at, and the price of atwo-year zero-coupon bond is $90.70--assume the face value is $100. Compute theprice of an European call option on the stock that expires in two years with a strike price of $80. Consider simple compounding. Use four decimals.

1) What is the price of the call option in the end of year 1 if the stock goes up in the firstyear?

2)What is the price of the call option today?