Chapter 6
	Stock Valuation at Ragan Engines
	Input area:
	Shares owned by each sibling	50,000
	Ragan EPS	$ 4.54
	Dividend to each sibling	$ 60,000
	Ragan ROE	18%
	Ragan required return	15%
		EPS	DPS	Stock price	ROE	R
	Blue Ribband Motors Corp.	$ 0.81	$ 0.20	$ 14.18	10.00%	10.00%
	Bon Voyage Marine, Inc.	1.38	0.62	11.87	13.00%	13.00%
	Nautilus Marine Engines	1.06	0.38	13.21	14.00%	12.00%
	Industry average	$ 1.08	$ 0.40	$ 13.09	12.33%	11.67%
	Output area:
1)	Total earnings (to both siblings)
	Payout ratio
	Retention ratio
	Growth rate
	Total dividends next year (to both)
	Total equity value
	Value per share
2)	Industry EPS
	Industry payout ratio
	Industry retention ratio
	Industry growth rate
	Year
	1
	2
	3
	4
	5
	6
	Stock value in Year 5
	Total stock value today
	Value per share	$ -
3)	Industry PE	#DIV/0!
	Ragan PE (original assumption)	-
	Ragan PE (revised assumption)	-
	Stock price implied by
	industry PE	#DIV/0!
4)	ROE	#DIV/0!