On May 25, 2018 you purchased an option which will allow you to sell a commercial building on August 14, 2022 for $42 million. Your current estimate of the value of the commercial building is $38 million. The annual volatility for the change in the commercial building’s value is 57% and the risk-free rate is 6%. a. What type of option is this? b. Calculate the value of the option to sell the commercial building.   Please show work using excel

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
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 On May 25, 2018 you purchased an option which will allow you to sell a commercial building on
August 14, 2022 for $42 million. Your current estimate of the value of the commercial building
is $38 million. The annual volatility for the change in the commercial building’s value is 57% and
the risk-free rate is 6%.
a.
What type of option is this?
b. Calculate the value of the option to sell the commercial building.
 
Please show work using excel 
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