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 $ 1.20 $ 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 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 11 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.) b-2. Which plan will provide the higher present value for the future dividends?

Answer #1

a)

Value of total Dividend of plan A = 1.2+1.2+1.2+1.5+1.5

= $6.6

Value of total Dividend of plan B = 0.2+1.4+0.2+4.1+1.6

= $ 7.5

b-1)

Present Value of dividend of Plan A

Present Value of dividend of Plan B

b-2) **Plan A would provide higher present value than plan
B**

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
$
1.80
$
.50
2
1.80
2.20
3
1.80
.20
4
2.10
4.00
5
2.10
1.40
a. How much in total dividends per share will be
paid under each plan...

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 $ 1.80 $ 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...

Suppose you are going to receive $13,900 per year for five
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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.,...

Please show calculations/formulas.
Suppose you are going to receive $12,800 per year for five
years. The appropriate interest rate is 7.7 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...

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...

Robbins Petroleum Company is five years in arrears on cumulative
preferred stock dividends. There are 890,000 preferred shares
outstanding, and the annual dividend is $7.00 per share. The
Vice-President of Finance sees no real hope of paying the dividends
in arrears. She is devising a plan to compensate the preferred
stockholders for 80 percent of the dividends in arrears. a. How
much should the compensation be? (Do not round intermediate
calculations. Input your answer in dollars, not millions (e.g.
$1,234,000).)...

Justin Cement Company has had the following pattern of earnings
per share over the last five years:
Year
Earnings
Per Share
20X1
$
12.00
20X2
12.60
20X3
13.23
20X4
13.89
20X5
14.58
The earnings per share have grown at a constant rate (on a rounded
basis) and will continue to do so in the future. Dividends
represent 40 percent of
earnings.
a. Project earnings and dividends for the next
year (20X6). (Round the growth rate to the...

Justin Cement Company has had the following pattern of earnings
per share over the last five years:
Year
Earnings
Per Share
20X1
$
9.00
20X2
9.54
20X3
10.11
20X4
10.72
20X5
11.36
The earnings per share have grown at a constant rate (on a rounded
basis) and will continue to do so in the future. Dividends
represent 40 percent of
earnings.
a. Project earnings and dividends for the next
year (20X6). (Round the growth rate to the...

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