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What is the intrinsic value of rrv common stock

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Reference no: EM132754263

Problem 1: Restful RVs Inc. (RRV) is presently enjoying relatively high growth because of a surge in the demand for recreational vehicles. Management expects earnings and dividends to grow at a rate of 35% for the next 4 years, after which high gas prices will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last paid dividend, D0, was $2.25. RRV's beta is 1.50, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the intrinsic value of RRV's common stock?

Reference no: EM132754263

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