21. A DECS contract pays two shares if ST < 27.875, 1.667 shares if the price is above ST > 33.45, and \($27.875\) and \($55.75\) otherwise. The quarterly dividend is $0.87.

Value this DECS assuming that S = \($26.70\), σ = 35%, r = 9%, and T = 3.3 and that the underlying stock pays a quarterly dividend of $0.10.

The next two problems are based on the M&I stock purchase contract.