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. 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 $ 1.80 $ 0.30 2 1.80 2.00 3 1.80 0.50 4 2.20 6.00 5 2.20 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.)

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 12 percent; the discount rate for Plan B is 15 percent. Compute the present value of future dividends. (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?

Answer #1

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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. 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
$
1.60
$
0.50
2
1.60
2.60
3
1.60
0.30
4
1.90
3.00
5
1.90
1.40
a. How much in total dividends per share will
be paid under each plan over five...

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
$
1.40
$
0.60
2
1.40
2.10
3
1.40
0.50
4
1.70
4.00
5
1.70
1.50
a. How much in total dividends per share will
be paid under each plan over five...

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 $ 1.20 $ 0.20 2
1.20 1.40 3 1.20 0.20 4 1.50 4.10 5 1.50 1.60 a. How much in total
dividends per share will be paid under each plan over five...

Suppose you are going to receive $13,900 per year for five
years. The appropriate discount rate is 8.8 percent.
a-1. What is the present value of the payments if they are in
the form of an ordinary annuity? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
a-2. What is the present value if the payments are an annuity
due? (Do not round intermediate calculations and round your answer
to 2 decimal places, e.g.,...

The Landers Corporation needs to raise $1.70 million of debt on
a 20-year issue. If it places the bonds privately, the interest
rate will be 12 percent. Twenty five thousand dollars in
out-of-pocket costs will be incurred. For a public issue, the
interest rate will be 11 percent, and the underwriting spread will
be 3 percent. There will be $110,000 in out-of-pocket costs. Assume
interest on the debt is paid semiannually, and the debt will be
outstanding for the full...

a. What is the future value in five years of
$1,200 invested in an account with an annual percentage rate of 10
percent, compounded annually? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Future value $ Not attempted
b. What is the future value in five years of
$1,200 invested in an account with an annual percentage rate of 10
percent, compounded semiannually? (Do not round
intermediate calculations and round your answer to 2...

Davis Chili Company is
considering an investment of $65,000, which produces the following
inflows:
Year
Cash Flow
1
$
29,000
2
28,000
3
25,000
Use Appendix B for an
approximate answer but calculate your final answer using the
formula and financial calculator methods.
a. Determine the net present value of the project
based on a zero percent discount rate.
b.
Determine the net present value of the project based on a 11
percent discount rate. (Do not round intermediate
calculations...

Davis Chili Company is considering an investment of $37,000,
which produces the following inflows:
Year
Cash Flow
1
$
17,000
2
16,000
3
13,000
Use Appendix B for an approximate answer but calculate your
final answer using the formula and financial calculator
methods.
a.
Determine the net present value of the project based on a zero
percent discount rate.
Net present
value
$
b.
Determine the net present value of the project based on a 10
percent...

The Landers Corporation needs to raise $1.60 million of debt on
a 5-year issue. If it places the bonds privately, the interest rate
will be 10 percent. Thirty thousand dollars in out-of-pocket costs
will be incurred. For a public issue, the interest rate will be 11
percent, and the underwriting spread will be 2 percent. There will
be $140,000 in out-of-pocket costs. Assume interest on the debt is
paid semiannually, and the debt will be outstanding for the full
5-year...

Suppose you are going to receive $9,500 per year for five years.
The appropriate interest rate is 11 percent.
a. What is the present value of the payments if
they are in the form of an ordinary annuity? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Present value
$
What is the present value of the payments if the payments are an
annuity due? (Do not round intermediate calculations and
round your answer...

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