Which plan will provide the higher present value

Reference no: EM131792468

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

a. How much in total dividends per share will be paid under each plan over the five years?

b. 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 10 percent; the discount rate for plan B is 12 percent. Which plan will provide the higher present value for the future dividends? (Round to two places to the right of the decimal point.)

Reference no: EM131792468

Questions Cloud

Written review based on management-labor relations : Prepare a written review based on a Management / Labor Relations topic.

How can buyers evaluate the quality or value : How can buyers evaluate the quality or value of these services?

What is the existential idea of the self : As you develop your response, you might find some of the following questions to be relevant: What is the existential idea of the self?

A 260/130v, 26kva single phase transformer has full load : A 260/130V, 26kVA single phase transformer has full load unity power factor efficiency of 94%. It is connected as an auto transformer to feed a load at 390V with input voltage of 260V. The full load efficiency of auto transformer at unity power facto..

Which plan will provide the higher present value : The discount rate to be used for Plan A is 10 percent; the discount rate for plan B is 12 percent. Which plan will provide the higher present value?

Explain the four truth test and illustrate each with example : Explain the four truth tests and illustrate each with an example of a belief that would be true by its standards.

Explain the role of leadership in managing quality : Locate and read three scholarly research articles on the role of leadership in managing quality initiatives in healthcare.

Discuss the property transferred by gail and jane : What gain or income do Gail and John recognize on the exchange

Show the capital section of the balance sheet : The firm intends to first declare a 10 percent stock dividend and then pay a 20-cent cash dividend (which also causes a reduction of retained earnings).

User Account

All Pages