You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1.7 million. Over the past five years, the price of land in the area has increased 10 percent per year, with an annual standard deviation of 17 percent. A buyer has recently approached you and wants an option to buy the land in the next 11 months for $1,820,000. The risk-free rate of interest is 6 percent per year, compounded continuously. How much should you charge for the option?

$100,060.20 $65,887.23 $105,063.21 $95,057.19 $121,206.08

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1.7 million. Over the past five years, the price of land in the area has increased 10 percent per year, with an annual standard deviation of 17 percent. A buyer has recently approached you and wants an option to buy the land in the next 11 months for $1,820,000. The risk-free rate of interest is 6 percent per year, compounded continuously. How much should you charge for the option? Multiple Choice $100,060.20 $65,887.23 $105,063.21 $95,057.19 $121,206.08