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Suppose a company grants stock options that last 8 years and vest after 3 years. The stock price and strike

price are both $40.00. The stock price volatility is 30%, the risk-free rate is 5%, and the company pays no dividends. What is the (risk-neutral) expected life for the employee stock option? What is the value of the option obtained by using this expected life in Black-Scholes-Merton?

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