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Beranek Technologies was founded 10 years ago.It has been profitable for the last 5 years,but it has needed all of its earnings to support growth and thus has never paid a dividend.Management has indicated that it plans to pay a $0.50 dividend 3 years from today,then to increase it at a relatively rapid rate for 2 years,and then to increase it at a constant rate of 8.00% thereafter.The forecast of the future dividend stream,along with the forecasted growth rates,is shown below.With a required return of 11.00%,what is the current intrinsic value?
Insurance
A monetary service that offers coverage against possible future harms or losses in return for a premium payment.
Adverse Selection
Adverse selection is a situation in financial markets where there is asymmetric information leading buyers or sellers to make decisions that can result in the market becoming skewed or unbalanced, often seen in insurance markets.
Insurance
A contract represented by a policy, where an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Risk Averse
A description of an individual's or entity's preference to avoid risk, often by choosing options with certain outcomes over those with higher degrees of uncertainty.
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