In doing a five-year analysis of future dividends, the Dawson Corporation is considering the following two...

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Finance

In doing a five-year analysis of future dividends, the DawsonCorporation is considering the following two plans. The valuesrepresent dividends per share. Use Appendix B for an approximateanswer but calculate your final answer using the formula andfinancial calculator methods.

  Year Plan A Plan B
  1 $ 1.50 $ .50
  2 1.50 2.30
  3 1.50 .30
  4 1.90 3.00
  5 1.90 1.30

a. How much in total dividends per share will bepaid under each plan over five years? (Do not roundintermediate calculations and round your answers to 2 decimalplaces.)



b-1. Mr. Bright, the vice president of finance,suggests that stockholders often prefer a stable dividend policy toa highly variable one. He will assume that stockholders apply alower discount rate to dividends that are stable. The discount rateto be used for Plan A is 10 percent; the discount rate for Plan Bis 14 percent. Compute the present value of future dividends.(Do not round intermediate calculations and round youranswers to 2 decimal places.)



b-2. Which plan will provide the higher presentvalue for the future dividends?

Plan A
Plan B

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In doing a five-year analysis of future dividends, the DawsonCorporation is considering the following two plans. The valuesrepresent dividends per share. Use Appendix B for an approximateanswer but calculate your final answer using the formula andfinancial calculator methods. YearPlan APlan B 1$1.50$.50 21.502.30 31.50.30 41.903.00 51.901.30 a. How much in total dividends per share will bepaid under each plan over five years? (Do not roundintermediate calculations and round your answers to 2 decimalplaces.) b-1. Mr. Bright, the vice president of finance,suggests that stockholders often prefer a stable dividend policy toa highly variable one. He will assume that stockholders apply alower discount rate to dividends that are stable. The discount rateto be used for Plan A is 10 percent; the discount rate for Plan Bis 14 percent. Compute the present value of future dividends.(Do not round intermediate calculations and round youranswers to 2 decimal places.) b-2. Which plan will provide the higher presentvalue for the future dividends? Plan APlan B

Year	Plan A			Plan B
1		$	1.50		$	.50
2			1.50			2.30
3			1.50			.30
4			1.90			3.00
5			1.90			1.30