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You own a lot in Montreal that is currently unused. Similar lots have recently sold for...

You own a lot in Montreal that is currently unused. Similar lots have recently sold for $2.6 million. Over the past five years, the price of land in the area has increased 12 percent per year, with an annual standard deviation of 15 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $2.8 million. The risk-free rate of interest is 8 percent per year, compounded continuously. How much should you charge for the option? (Do not round intermediate calculations. Enter the answer in dollars. Round the answer to 2 decimal places. Omit $ sign in your response.)

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