15) Stocks dic policy assign.

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	$ 1.30	$ 0.30
2	1.30	1.60
3	1.30	0.20
4	1.50	4.00
5	1.50	1.80

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 11 percent; the discount rate for Plan B is 14 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