The directors of West Coast Yachts are considering vertical expansion of the company by acquiring an engine manufacturer to allow it to integrate its supply chain and have more control over engine features. After investigating several possible companies, the directors consider that Arison Engines Inc. is a possibility. Arison Engines Inc. is a privately owned company and equally owned by a couple. Arison has experienced rapid growth in the recent few years. The couple owns 200,000 shares each . The directors have asked David, the analyst, to determine the value per competitors that David has gathered the following information about some of Arisons competitors that publicly traded: 1. Assuming the company continues its current growth rate, what is the value per share of the company's stock? 2. Although Arison currently has technological advantage, research indicates that its competitors are investigating other methods to improve efficiency and that Arison's technological advantage will last for only the next five years. After that period, the company's growth will likely slow to the industry average. Besides, David believes that the required return of the company is too high. He believes the industry average required return is more appropriate. Under David's assumptions, what is the estimated stock price? 3, What is the industry average price-earnings ratio? What is Arison's price-earnings ratio? Comment on any differences and explain why they may exist. 4, Assume the company's growth rate slows to the industry average in five years. What future ROE does this imply? 5. The couple is not sure if they should sell the company. If they do not sell the company to West Coast Yachts, they would like to try and increase the value of the companys stock. In his case, they want to retain control of the company and do not want to sell stock to outside investors. They feel that the companys debt at a manageable level. What steps can they take to try and increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price