Robbins Petroleum Company is four years in arrears on cumulative preferred stock dividends. There are 690,000 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 80% of the dividends in arrears.

A. How much should the compensation be?

B. Robbins will compensate the preferred stockholders in the form of bonds paying 12% interest in a market environment in which the going rate of interest is 8% for similiar bonds. the bondsf will have a 10 year maturity. using the bond valuation table indicate the market value of a $1,000 par value bond.

C. based on market value, how many bonds must be issued to provide the compensation determined in part A? (Round to the nearest whole number).