**SECOND time posting this question because of incorrect answers!**

Enterprise Storage Company has 480,000 shares of cumulative preferred stock outstanding, which has a stated dividend of $7.50. It is six years in arrears in its dividend payments. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. How much in total dollars is the company behind in its payments? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).)

Dividend in Arrears: $21,600,000

b. The firm proposes to offer new common stock to the preferred stockholders to wipe out the deficit.

The common stock will pay the following dividends over the next four years:

D1	$1.35
D2	1.45
D3	1.55
D4	1.65

The company anticipates earnings per share after four years will be $4.13 with a P/E ratio of 14.

The common stock will be valued as the present value of future dividends plus the present value of the future stock price after four years. The discount rate used by the investment banker is 14 percent.

Compute the value of the common stock. (Do not round intermediate calculations and round your answer to 2 decimal places.)

Common Stock: $_____________

c. How many shares of common stock must be issued at the value computed in part b to eliminate the deficit (arrearage) computed in part a? (Do not round intermediate calculations and round your answer to the nearest whole share.)

Numbers of shares of Common Stock:_______________________

Appendix B Present value of $1, PV PV-FV 0.990 0.797 0.816 0.794 0.731 0.784 0.746 0.942 0.933 0.790 0.760 0.706 0.596 0.623 0.677 0.627 0.582 0.540 0.50 0.467 .434 0.404 0.645 0.914 0.905 0.766 0.744 0.703 0.585 0.429 0.887 0.788 0,701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 257 0.469 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 263 0232 0205 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0275 0.239 0.209 0.183 0.853 0.72 0.623 0.534 0.458 0.394 0.339 .29 0262 0218 0.188 0.163 0.146 0.138 0.780 0.097 0.067 0.046 0.606 0.372 0.228 0.141 30% 39% 40% 0.885 0877 .8 0.862 0.855 0.847 0.840 .833 0.800 0.769 0.741 0.7140.667 2...0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.640 0.592 0.549 0.510 0.444 0.693 0.675 0668 0.641 0.624 0.609 0.593 0.579 0.512 0455 0.408 0364 0.296 m0.613 0.592 0.572 0.552 0.534 0.515 04 0.482 0.410 0350 0.301 0.260 0.198 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.328 0.269 0.223 0.186 0.132 0.480 0.456 0.432 0.410 0.390 0.370 352 0.335 0.262 0.207 0.165 0.133 0.088 0.378 0.351 0327 0.306 0.265 0.266 0249 0.233 0168 0.123 0.091 0.068 0.039 0.333 0.306 0.284 0.283 0243 0.225 2 0.194 0.134 0.094 0067 0.048 0.028 0.176 0.162 0.107 0.073 0.050 0.035 0.017 0.261 0.237 0215 0.196 0.178 0.162 0.148 0.135 0.088 0.056 0.037 0.026 0.012 0.231 0.206 0.187 0,18 05 0.137 0.124 0.112 0.069 0.043 0.027 0018 0.008 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.055 0.033 0.020 0.013 0.005 0.181 0.160 0141 0.125 0.111 0.099 0.088 0.078 0.044 0.025 0.015 0.009 0.003 0.20B 0.191 2 0.123 0.108 0.095 0.084 0.074 0.035 0.020 0.011 0.141 0.123 0.107 0.093 0.01 0.071 0.062 0.054 0.028 0.015 0.008 0.005 0.002 70.125 0.108 0.093 0.080 0. 0.00 0.052 0.045 0.023 0012 0.008 0,003 0.001 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.018 0.009 0.005 0.002 0.001 0.098 0.083 0070 0.060 .051 0.043 7 0.031 0.014 0.007 0.003 0.002 0 200.067 0.073 0061 0.05 0.043 0.0370.031 0.026 0.012 0005 0.002 0.001 0 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.004 0.001 0.026 0.020 0015 0.012 0.009 0.007 0.005 0.004 0.0010 9 0.002 0.001 0001 0.001 0