The provided solution does not include dividend payments but as far as I remember if we expect cash inflows:
c + X/(1+r)^t = p + S - PV of dividends
If it were third party provider I would say it’s a mistake. However now I’m trying to guess what could be the reason not to include dividends in the call option price calculation. Ideas?
The present value of all cashflows is subtracted from the spot price.
I thought the same thing on this question. The only answer I can think of (if I recall correctly) is the question said “Using Exhibit 1”, but didn’t specify also using “Mr. X’s information” from the paragraph above, which is where the dividend was given. I assumed it’s sloppiness on their part.