Rio National Corp. is a U.S.-based company and the largest competitor in its industry. Tables 18F through 18I present financial statements and related information for the company. Table 18J presents relevant industry and market data.

The portfolio manager of a large mutual fund comments to one of the fund’s analysts, Katrina Shaar: “We have been considering the purchase of Rio National Corp. equity shares, so I would like you to analyze the value of the company. To begin, based on Rio National’s past performance, you can assume that the company will grow at the same rate as the industry.”

a. Calculate the intrinsic value of a share of Rio National equity on December 31, 2020, using the Gordon constant-growth model and the capital asset pricing model.

b. Calculate the sustainable growth rate of Rio National on December 31, 2020. Use 2020 beginning-of-year balance sheet values.