#38 Davidson Corporation is deciding between the two dividend payment plans below:

Year

Plan A

Plan B

1

$3.00

$0.50

2

$3.05

$1.75

3

$3.10

$3.25

4

$3.15

$6.80

Stockholders are expected to discount Plan A by 12% and Plan B by 14%. Based upon the present value of the future dividends, which plan will the stockholders prefer?

Select one:

A. Plan A

B. Plan B

C. Either, since both plans pay equal total dollar amounts.

D. Neither, since the dividend payout ratios are the same.