The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. What is the value of each option using a one-period binomial model? The risk-free interest rate is 2% per annum. Assume non continuous compounding.

A. $3.93

B. $2.93

C. $1.93

D. $0.93

Answer: D

the answer is given. can someone please help me with the steps before finals. thanks