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In doing a five - year analysis of future dividends, the Dawson Corporation is considering the following two plans. The values represent dividends per share.

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 $ 0.60
21.902.30
31.900.20
42.405.00
52.401.60
a. How much in total dividends per share will be paid under each plan over five years?
Note: Do not round intermediate calculations and round your answers to 2 decimal places.
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.
Note: Do not round intermediate calculations and round your answers to 2 decimal places.
b-2. Which plan will provide the higher present value for the future dividends?
multiple choice
Plan A
Plan B

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