Answer:
Intrinsic value is $45
Explanation:
The starting point to determining Rivoli Company intrinsic value is to compute the earning after tax as shown below:
Earnings after tax=earning before tax*(1-tax rate)
earnings before tax is $600,000
tax rate
earnings after tax=$600,000*(1-0.25)
                =$600,000*0.75
                =$450,000
Then we need to compute earnings per share;
Earnings per shares=earnings after tax/weighted average number of shares
                 =$450,000/100,000
                =$4.5
Intrinsic value=earnings per share/cost of equity
 cost of equity is 10%
intrinsic value=$4.5/10%
           =$45
