Equity Investments 10. An investor purchases a preferred stock with an annual dividend of $4.00 and a required rate of return of 8%. If the risk-free rate of return is 2.5%, what is the value of preferred stock? 11. Consider a firm which has projected dividends next year of $1.60 per share, $1.80 in two years, and a terminal value of $100 two years from now. If the firm's cost of equity is 10% and the weighted average cost of capital is 16%, what is the current value of equity if total outstanding debt per share is $50? Derivatives 12. An investor holds a put option on a stock. The stock price is currently $40. The option is in-the- money by $4. What is the put option's strike