The price of Build A Fire Corp. stock will be either $86 or $119 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent.
a. Suppose the current price of the company's stock is $97. What is the value of the call option if the exercise price is $85 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Value of the call option___________?
b. Suppose the exercise price is $115 and the current price of the company's stock is $97. What is the value of the call option now?