90.2K

Verified Solution

Link Copied!

STOCK PRICE ROA EPS DPS ROE Blue Ribband Motors Corp. S 1.24 $ 0.39 S 20.10 11.00% 14.00% Bon Voyage Marine, Inc. Nautilus Marine Engines 1.55 0.47 16.85 14.00% 17.00% (0.25) 0.67 31.60 N/A 13.00% 0.85 0.51 Industry average The company is equally owned by Carrington and Genevieve. The original agreement between the siblings gave each 125,000 shares of stock. Larissa has asked Dan to detemine a value per share of Ragan stock. To accomplish this Dan has gathered the following info about some public competitors. Nautilus Marine Engines (EPS) was the result of an accounting write-off last year. Without the write-off, EPS for the company would have been S1.93. Last ycar, Ragan had an EPS of $3.65 and paid a dividend to Carrigton and Genevieve for $195,000 cach. The company also had a ROE of 18 %. Larissa teslls Dan that a required return for Ragan of 13% is appropriate. 22.85 12.50% 14.67% 2. Dan has examined the company's financial statements, as well as examining those of its competitors. Although Ragan currently has a technological advantage, Dan's research indicates that Ragan's competitors are investigating other methods to improve efficiencey. Given this, Dan believes that Ragan's technological advantage will last only for the next five years. After that period, the company's growth will likely slow to the industry average. Additionally, Dan believes the industry average required return is more appropriate. Under Dan's assumptions, what is the estimated stock price? (Do not round intermediate calculations) a. Calculate the industry's average growth rate. You may need to adjust for nonrecurring events that would impact the industry information Average Industry Growth Rate- b. Calculate the Dividends for Ragan for each of the next 6 years e. What is the value of the stock today and what is the value per share

Answer & Explanation Solved by verified expert

See Answer