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The current stock price of XYZ plc is 50. European put options on XYZ have an exercise price of 50, the risk free interest rate

The current stock price of XYZ plc is 50. European put options on XYZ have an exercise price of 50, the risk free interest rate is 10% per annum, the stock volatility is 30% per annum, and the time to maturity is three months. XYZ is expected to distribute a dividend of 1.50 in two months.

Required: Calculate the price of the option using the Black-Scholes formula. Show enough calculations to show you understand how to apply the Black-Scholes formula.

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