What is the value of the option

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Reference no: EM131241241

A driver entering into a car lease agreement can obtain the right to buy the car in 4 years for $10,000.

The current value of the car is $30,000. The value of the car, S, is expected to follow the process is a Wiener process.

The market price of risk for the car price is estimated to be - 0:1. What is the value of the option? Assume that the risk-free rate for all maturities is 6%.

Reference no: EM131241241

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