Enviva (EVA) procures wood fiber and processes it into utility-grade wood pellets and loads the finished wood pellets into railcars, trucks and barges for transportation to deep-water marine terminals, where they are received, stored and loaded onto oceangoing vessels for delivery under long-term, take-or-pay off-take contracts to the companys customers principally in the U.K., Europe and Japan. The company owns and operates industrial-scale wood pellet production plants located in the Mid-Atlantic and Gulf Coast regions of the U.S. The companys wood pellets are used as a substitute for coal in both dedicated and co-fired power generation and combined heat and power plants. Its mission is to displace coal, grow more trees, and fight climate change.

EVA began paying cash dividends in 2015. Its most current quarterly dividend was $0.905, which it has declared three quarters in a row. The compound annual growth rate in dividends over the past five years has been 8.1%. EVAs EPS history is as follows: 2022 (3 quarters) = $-1.42, 2021 = $-4.76, 2020 = $-5.39, 2019 = $-5.09, 2018 = $0.25. The stock closed 2018 at $21.52, 2021 at $67.81, and today is priced at $60.40. The beta for EVA based on the last 60 months of trading data is 1.13.

There are 66.8M shares outstanding 83.6% owned by institutional investors. The biggest shareholder is Riverstone Holdings (controls 28.1M shares 42% of outstanding stock), a private equity company that focuses on energy and de-carbonizing broad sectors of the economy. EVA is (by far) their largest single stock investment. In June 2020, Riverstone Holdings (and a consortium of other investors) invested $1B in new common stock issued by EVA.

[1] If the current risk-free rate is 3.45% and the market price of risk is 6.69%, what would the expected return for EVA according to the CAPM?

[2] If the market expects the dividends for EVA to grow at the five-year CAGR of 8.1% indefinitely, what should be the price of EVA today, according to the [Gordon] constant dividend growth model?

[3]What should be the price of EVA today if the market only expects a 6% dividend growth rate?

[4] Based on this limited information, how could the large ownership state of Riverstone Holdings likely impact the valuation of EVA and its future dividend policy (and thus, the value of EVA shares)?