Option Payoff Problem

Quote:

The price of a one year 950-strike European call on the S&R index is 120.41. The price of a one year 1050-strike call on the S&R index is 71.80. The annual effective interest rate is r=.02 . A trader buys the 950 call and sells the 1050 call. At what stock value is his profit 0?

The answer says S-950-(120.41-71.80)*1.02.



My question is: Why are the premiums brought forward one year? And also, The payoff for the long call is S-950 and the payoff for a short put is -(S-1050), so wouldn't the S terms cancel out when you compute S-950-(S-1050)?

Option Payoff Problem