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BFR Cargo Ltd will shortly be listed on the stock exchange. It is known that the valuation will be between $10.00 and $14.00.
Prior to listing, traders will receive information updates that will allow them to eliminate, with certainty, a given range of values.
The time to listing is 500 hours.
The pricing estimates are driven by the following model:
Et = Pub - X(T-t)/Ev
Where:
Et = estimate of the price at time t
Pub = final price
X = uniform random variable distributed between -0.05 and 0.05
T = time until listing
t = elapsed time
Ev = initial expected value (at t=0)
At t=100, the trader receives an estimate of the final value from a reputable analyst of $11.76
Calculate the new upper valuation band.
(Please display your answer to 2 decimal places.)
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