1. The stocks for American Arborist, Inc. are selling for $80. A six-month call option with a $90 strike price goes for $2. The risk-free rate is 1% per month. What's the value of a six-month put option with a $90 strike price?
2. An asset costs $650,000 and will be depreciated in a straight-line manner over its five-year life. It will have no salvage value. The appropriate interest rate is 8 percent. The lessee pays no taxes and the lessor has a tax rate of 30%. Assume the lessee pays an annual payment of $160,000.
a. What is the NPV for the lessor?
b. Will there be a lease contract between the lessor and the lessee?