3M Company was founded in 1902 in the U.S. 3M is well known for its Post-it Notes. In 2003, 3M introduced Post-it Super Sticky Notes, an enhanced Post-it Notes product for use on vertical and hard-to-stick surfaces. 3M had developed a prototype of this enhanced Post-it Notes using solvent-based adhesive formulations during the late 1990s, but did not release the stickier Post-it Notes because of the Volatile Organic Compounds (VOCs) in the formulation. 3M delayed introducing the product until it was able to develop a new, water-based adhesive formulation. 3M's new water-based formulation had the desired sticking power, while generating fewer air emissions, and was less expensive to manufacture than the proposed solvent-based formulations that 3M had originally developed. According to Keith Miller, Manager, Environmental Initiatives and Sustainability Group, who said that the lost opportunity costs of delaying the Post-it Super Sticky Notes were substantial, which could offset all the profits generated from the sale of Super Sticky Notes. 3M reports that the new formulations emit less VOC emissions and less Toxic Release Inventory (TRI) emissions annually than if the proposed solvent-based process had been implemented.

(1) Suppose that 3M just paid a dividend of D0 = $1.32. Analysts expect the company's dividend to grow by 30% in 2004, 10% in year 2005, and a constant rate of 5% in 2006 and therefore, as they believe that customers are more willing to pay for the green product Post-it Super Sticky Notes. The required return on 3M is 9.00%. What is the best estimate of 3M's current market value?

(2) Is 3M's delaying decision justified? Answer the question using the shareholder wealth maximization theory and the stakeholder theory and compare the two theories in explaining the delaying decision. [Hints: analyze the costs and benefits of 3M's decision and the potential ethical considerations. No calculation is required.]