I'm trying to use an old paper "Implied trinomial trees of the volatility smil" February 1996 bu Derman, Kani and Chriss, to test my Implied tree model. I'm looking at their first detailed example and trying to follow through my results. Unfortunately I have some basic problems, in that on page 10 of the paper it talks about Fa = Sexp(r-divs)deltaT = 104.5, but I get this to be 105.127. where S=100, r=10%, divs=5%, deltaT=1Does anyone know where this is going wrong, or have used this or an alternative paper for an implied trinomial tree model?Or does anyone have any alternative papers which contain a worked example e.g. calculating up and down probablilities and arrow-debreu prices and local volatilities?thanks!

There's a very clear worked example in "Implementing Derivatives Models" by Clewlow and Strickland. I think there might also be one in "Option Theory" by Peter James. If not, theres definitely a fairly detailed chapter about implied trees.

Better and cheaper to look in Haug's option pricing formulas bookEven better to find the Barle & Cakici article with an improved implied binomial tree with a spine that follows the forward rate

I think I worked out how to get my model to work however I had a look in Haug's book (version 1) and it seems to confuse Fi as on page 133 for instance it has it without Exp ( b*t) but then on page 134 it has this extra exp (b*t) factor in it as does the code there. Does anyone know which is correct? With or witout the extra exp(b*t). Also what about the rest of the code then? Are there errata's in this? Does anyone have erratas for the Haug "the complete guide to option pricing formulas" first version?