*Preferred dividend - Acura Labs Inc. has an outstanding issue of preferred stock with a par value of $70 and an 20%

annual dividend.

a.What is the annual dollar dividend? If it is paid quarterly, how much will be paid each quarter?

b.If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 2 quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders?

c.If the preferred stock is cumulative and the board of directors has passed the preferred dividend for the last 2 quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders?

*Preferred stock valuation - Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a par value of $80 and pays an annual dividend of $6.40 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 9.3%.

If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 10.5%?