Reference no: EM132949577

-Create a spreadsheet that applies the variable-growth model to predict the intrinsic value of the Rhyhorn Company common stock. Assume that dividends will grow at a variable rate for the next three years (2019, 2020, and 2021). After that, the annual rate of growth in dividends is expected to be 7% and stay there for the foreseeable future. Starting with the latest (2018) annual dividend of $2.00 per share, Rhyhorn's earnings and dividends are estimated to grow by 18% in 2019, by 14% in 2020, and by 9% in 2021 before dropping to a 7% rate. Given the risk profile of the firm, assume a minimum required rate of return of at least 12%.
-Calculate the projected annual dividends over the years 2019, 2020, and 2021.
-Determine the present value of dividends during the initial variable-growth period.
-What do you believe the price of Rhyhorn stock will be at the end of the initial growth period (2021)?
-Having determined the expected future price of Rhyhorn stock in part c, discount the price of the stock back to its present value.
-Determine the total intrinsic value of Rhyhorn stock based on your previous calculations.