15)

In doing a five-year analysis of future dividends, the Dawson Corporation is considering the following two plans. The values represent dividends per share. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year	Plan A	Plan B
1		$	1.90			$	.60
2			1.90				2.30
3			1.90				.20
4			2.40				5.00
5			2.40				1.60

a.	How much in total dividends per share will be paid under each plan over five years? (Do not round intermediate calculations and round your answers to 2 decimal places.)

	Total Dividends
Plan A	$
Plan B	$

b-1.

Mr. Bright, the Vice-President of Finance, suggests that stockholders often prefer a stable dividend policy to a highly variable one. He will assume that stockholders apply a lower discount rate to dividends that are stable. The discount rate to be used for Plan A is 8 percent; the discount rate for Plan B is 12 percent. Compute the present value of future dividends. (Do not round intermediate calculations and round your answers to 2 decimal places.)

	Present Value of Future Dividends
Plan A	$
Plan B	$

b-2.	Which plan will provide the higher present value for the future dividends?
	Plan A Plan B