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 companys 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.