If this questions need to its formula sheet, you will be used it.

Copper Inc. has outstanding cumulative preferred stock with a par value of $105.00. The shares pay an annual dividend of $6.00 per share. Analysts are considering two possible scenarios and dividend payout options, based on the company's earnings outlook and market conditions. Scenario 1: There are no changes in market conditions or earning prospects and the company pays all preferred dividends on time. Scenario 2: The company has an opportunity to reinvest earnings into a project that will help grow earnings for the next 4 years. No dividends will be paid for the 4 years. The dividends will resume in year 5 with the payment of all back dividends as well as the current dividend. Subsequent dividends will be paid on time. Which of the two scenarios will result in a higher current value of the stock? Assume a required rate of return of 13%. Show your work. Formula Sheet PV- FV (1+r) pr. -g 1 PVC or or F-c 6Y-1) ---1-6) of APR 1 EAR-1 -1 EAR-1 APR EPR-1 (FV - MV) Y7M FVMW Del P- D. D D D+P - 5 D (1+r) PVCCATS- IdT dur SIT YTM + + FVMV DU Pes 30 r D D (1+r)(1+r) D. + P + D PVCCATS - IdT 111+0.57 dur Financial Ratios Equity Multiplier = Total Assets / Total Equity Times Interest Earned = EBIT / Interest Inventory Turnover = Cost of Goods Sold / Inventory Total Asset Turnover = Sales / Total Assets Profit margin = Net Income / Sales Market-to-Book Ratio = Market Value per Share / Book Value per Share ROE = PM x TAT x EM