c.

Robbins Petroleum Company is four years in arrears on cumulative preferred stock dividends. There are 800,000 preferred shares outstanding, and the annual dividend is $6.50 per share. The Vice-President of Finance sees no real hope of paying the dividends in arrears. She is devising a plan to compensate the preferred stockholders for 90 percent of the dividends in arrears: a. How much should the compensation be? Note: Do not round intermediate calculations. Input your answer in dollars, not millions (e.g. $1,234,000). b. Robbins will compensate the preferred stockholders in the forl of bonds paying 12 percent interest in a market environment in Which the going rate of interest is 12 percent for similar bonds. The bonds will have a 15-year maturity. Using the bond valuation Table 16.2. indicate the market value of a $1,000 par value bond. Note: Round your answer to the neorest whole number. Table 162 Interest rates and bond prices (face value is $1,000 and annual coupon rate is 12% ) c. Based on market value, how many bonds must be issued to provide the compensation determined in part a? Note: Do not round intermediate calculations and round your answer to the nearest whole number