Option Value Question: Temporary Dam that provides water for irrigation. Two contingencies: wet or dry weather • Farmer Income under different scenarios:
Wet: Dam- 110, No Dam-100. Dry: Dam- 100, No Dam- 50.
1. Compute expected value
2. Compute variance
3. Compute expected surplus
4. Compute option price
5. Compute option value
Please provide detailed solutions and steps.