The question and answer gives the wrong rate of interest.  It should be 2% per quarter (.08/4) giving a 80/1.02 for the PV of the exercise price.  This is clearly stated in the problem where the risk free rate is 8% per annum, or 2% per quarter.  When the answer uses (1.08^.25) -1 = 1.0194 as the PV discount factor, it incorrectly interprets 8% as the effective annual rate.  This will be very confusing to some who may not be familiar with this topic.

[NEAS: Correct. The answer explains how different compounding intervals affect the solution.]