FIN 5550-The current price of a stock is $45

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January 5th, 2018

Please provide your answer in excel.1)The current price of a stock is $45, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells for $4.736. What is the value of a put option, assuming the same strike price and expiration date as for the call option?2)The CFO of Lenox Industries hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: (1) rd = yield on the firm’s bonds = 7.00% and the risk premium over its own debt cost = 4.00%. (2) rRF = 5.00%, RPM = 6.00%, and b = 1.25. (3) D1 = $1.20, P0 = $35.00, and g = 8.00% (constant). You were asked to estimate the cost of common based on the three most commonly used methods and then to indicate the difference between the highest and lowest of these estimates. What is that difference?

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