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 2 Plan A $1.80 1.80 1.80 2.30 2.30 Plan B $0.60 2.10 0.30 3.00 1.50 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 9 percent; the discount rate for Plan B is 13 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 O Plan B Appendix Present value of $1. PV PV=FV Period 0 0 8% 0.926 0.857 0.794 0940 0.735 0.691 0.630 0.583 0.540 0 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0600 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 70 .723 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0610 0552 0.453 0.372 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0 478 0412 0.307 0228 4% .962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0,513 0.494 0475 0.456 0.375 0.308 0.208 0.141 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 436 0.416 0.396 0.377 0.295 0.231 0.142 0087 Percent 6% 7% 0.943 0.935 0.890 0.873 0.816 0.792 0.763 0.747 0.713 0.705 0.666 0.665 0.623 0.627 0.582 .592 0.544 0.558 0.508 0.527 0.475 0.497 0.444 0.469 0.415 0.442 0.388 0.417 0.362 0.394 0.339 0371 0.317 0.350 0.296 0331 0.277 0.312 0 .258 0 233 0.184 0.174 0 131 0.097 0.067 0054 0.034 9% .917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0275 0.252 0.231 0212 0212 0194 0.178 0 116 0075 0.032 0.013 10% 11% 0.909 0.901 0.826 0.812 0.751 0.731 0.683 0.659 0.621 0.593 0.564 0.535 0.513 0.482 0.467 0.434 0.424 0.391 0.386 0.352 0.350 0.317 0.319 0.286 0.290 0.258 0.263 0.232 0.239 0.209 0.218 0.18 0.198 0.170 0.1800.153 0.164 0.138 138 0.149 0.124 0.092 0.074 0.057 0.044 0.022 0,015 0.009 0.005 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0232 0.215 0146 0.099 0.046 0.021 12% 0.893 0.797 0.712 0.636 0.567 0507 0.452 0.404 0.361 0.322 0287 0.257 0.229 0.205 0.183 0.163 0.145 0.130 0 116 0.104 0059 0.033 0,011 0.003 0 0 .... .. Appendix (concluded) Present value of $1 Period 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.047 0.025 0.008 0.002 14% 15% 0.877 0.870 0.769 0.756 0.675 0.658 0.592 0.572 0.519 0.497 0.456 0.432 0.400 0.376 0.351 0.327 0.308 0.284 0.270 0.247 0.237 0.215 0.208 0.187 0.182 0163 0.1600.141 0.140 0.123 0.123 0.107 0.108 0.093 0.095 0.081 0.083 0.070 0.073 0.061 0.038 0.030 0.020 0,015 0.005 0.004 0.001 0.001 Percent 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 0.862 0.855 0.847 0.840 0.833 0 .800 0.769 0.741 0.714 0.667 0.743 0.731 0.7180 .706 0.694 0.640 0.592 0.549 0.510 0.444 0.641 0.624 0.609 0.593 0.5790.512 0.455 0.406 0.364 0.296 0.552 0.534 0.5150.499 0.482 0.4100.3500 .301 0.260 0.198 0.476 0.456 0.437 0.4190.402 0.328 0.2690.223 0.186 0.132 0.410 0.390 0.370 0.352 0 .335 0.262 0.207 0.165 0.133 0.088 0.354 0.333 0.314 0.296 0.279 0.210 0.159 0.122 0.095 0.059 0.305 0.285 0.266 0.249 0.233 0.168 0.123 0.091 0.068 0.039 0.263 0.243 0.225 0.209 0.194 0.134 0.094 0.067 0.048 0.026 0.227 0.209 0 .191 0.126 0.162 0.107 0.073 0.050 0.035 0.017 0.195 0.178 0.162 0.148 0.135 0.086 0.056 0.037 0.025 0.012 0.168 0.152 0.137 0.124 0.112 0.069 0.043 0.027 0.018 0.008 0 1450 130 0.116 0 1040093 0.055 0.033 0.02000130005 0.125 0.111 0.099 0.088 0.078 0.044 0.025 0.0150.0090.003 0.108 0.095 0.084 0.074 0.055 0.035 0.0200.0110.006 0.002 0.093 0.081 0.071 0.062 0.054 0.028 0.015 0.008 0.005 0.002 0.000 0.069 0.060 0,052 0.045 0.023 0.012 0.006 0.003 0.001 0.069 0.059 0.051 0.044 0.038 0.018 0.0090.005 0.002 0.001 0.060 0.051 0.043 0.037 0.031 0.014 0.007 0.003 0.0020 0.051 0.043 0.037 0.031 0.026 0.012 0.005 0.002 0.0010 0.024 0.020 0.0160.013 0.010 0.004 0.001 0.0010 0,012 0.0090.007 0.005 0.004 0.001 0 0 0.003 0.002 0.001 0.001 0.001 0 0 0 0.001 0 0 0 0 0 0 0 0