INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
14th Edition
ISBN: 9780357533611
Author: Brigham
Publisher: CENGAGE L
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Chapter 24, Problem 2MC
Summary Introduction

Case summary: A mid-sized company TSI has hired a financial analyst. The company creates the exotic sauces from imported fruits and vegetables. The CEO of the company has asked the financial analyst to make a report on enterprise risk management thus company’s executive may gain knowledge about enterprise risk management as no one knows about it in the organization.

To discuss: The six reasons, that the risk management might upsurge the value of company.

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A company currently pays a dividend of $3.6 per share (D0 = $3.6). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.4, the risk-free rate is 8.5%, and the market risk premium is 4.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
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