Question;Rentz 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 30% for the next 4 years, after which high gas prices will probablyreduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company?s last dividend, D0, was $1.25. RRV?s beta is 1.20, the market risk premium is 4.50%, and the risk-free rate is 3.00%. What is the intrinsic value of RRV?s common stock? 7.Using the information on Rentz RVs Inc. from problem 6, what is the dividend yield expected for the next year?
Paper#51847 | Written in 18-Jul-2015Price : $22