sidering the following two plans. The values represent dividends per share. la doing a five-year analysSis of future dividends, the Dawson Corporation is con- cidering the following fwo pians. The values represent dividends per share. Plan A Plan B $1.50 $.50 ... 1.50 2.00 1.50 .20 4 1.60 4.00 5 ... 1.60 1.70
sidering the following two plans. The values represent dividends per share. la doing a five-year analysSis of future dividends, the Dawson Corporation is con- cidering the following fwo pians. The values represent dividends per share. Plan A Plan B $1.50 $.50 ... 1.50 2.00 1.50 .20 4 1.60 4.00 5 ... 1.60 1.70
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:sidering the following two plans. The values represent dividends per share.
la doing a five-year analysSis of future dividends, the Dawson Corporation is con-
cidering the following fwo pians. The values represent dividends per share.
Plan A
Plan B
$1.50 $.50
...
1.50
2.00
1.50
.20
4
1.60
4.00
5 ...
1.60
1.70
Transcribed Image Text:586
Part 5 Long-Term Financing
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.)
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