Mini Case-Fundamentals of Corporate Finance

Good Essays
Q:
Introduction: Larissa has been talking with the company’s directors about the future of East Coast Yachts. To this point, the company has used outside suppliers for various key components of the company’s yachts, including engines. Larissa has decided that East Coast Yachts should consider the purchase of an engine manufacturer to allow East Coast Yachts to better integrate its supply chain and get more control over engine features. After investigating several possible companies, Larissa feels that the purchase of Ragan Engines, Inc., is a possibility. She has asked Dan Ervin to analyze Ragan’s value. Ragan Engines, Inc., was founded nine years ago by a brother and sister, Carrington and Genevieve Ragan and has remained a privately owned company. The company manufactures marine engines for a variety of applications. Ragan has experienced rapid growth because of a proprietary technology that increases the fuel efficiency of its engines with very little sacrifice in performance. The company is equally owned by Carrington and Genevieve. The original agreement between the siblings gave each 150,000 shares of stock. Larissa has asked Dan to determine a value per share of Ragan stock. To accomplish this, Dan has gathered the following information about some of Ragan’s competitors that are publicly traded:

Blue Ribband Motors Corp- EPS=$1.09 DPS=$.16 Stock Price=$15.19 ROE=11.00% R=14.00% Bon Voyage Marine Inc.- EPS=1.16 DPS=.52 Stock Price=12.49 ROE=14.00% R=19.00% Nautilus Marine Engines- EPS=(.32) DPS=.54 Stock Price=23.05 ROE=N/A R=18.00% Industry Average- EPS=$.64 DPS=$.41 Stock Price=$16.91 ROE=13.00% R=17.00%

Nautilus Marine Engine's negative earnings per share (EPS) were the result of an accounting write-off last year. Without the write-off, EPS for the company would have been $1.97. Last year, Ragan had an EPS of $5.08 and paid a dividend to Carrington and Genevieve

You May Also Find These Documents Helpful

  • Satisfactory Essays

    WEEK 4 ASSIGNMENT 1 1 Week 4 Assignment 1 Edwin Lopez-Petrilli Professor William Hall Fundamentals of Corporate Finance Tuesday July 26, 2011 WEEK 4 ASSIGNMENT 1 2 Explain why market prices are useful to a financial manager. Financial managers are tasked with making investment decisions, financing, and managing cash flows from operating activities therefore when prices from competitive markets determine the cash value of goods and the price determines the value of the goods. Financial…

    • 787 Words
    • 4 Pages
    Satisfactory Essays
  • Powerful Essays

    Fundamentals of corporate finance (European edition) by David Hillier Quartile 4 IBA Chapter 1 - 14 Chapter 1 Introduction to corporate finance 1.1 Corporate finance and the financial manager Corporate finance must be considered with three basic types of question: 1. What long-term investments to make 2. Where will we get the money for those investments from 3. How will we manage everyday financial activities 1. What long-term investment to make: To process of planning and…

    • 6776 Words
    • 32 Pages
    Powerful Essays
  • Satisfactory Essays

    Finance and Mini Case

    • 438 Words
    • 2 Pages

    results (0.65 seconds) Search Results Entrepreneurial Finance - Page 425 - Google Books Result books.google.com/books?isbn=1305156188 J. Leach, ‎Ronald Melicher - 2014 - ‎Business & Economics MINICASE. R.K.. Maroon. Company. R.K. Maroon (RKM) is a seed-stage, ... 3) $100 million venture value with a one-time initial $2 million in venture financing. Mini Case R.K Maroon - College Essays - Jerome74300 www.studymode.com/course.../Mini-Case-r-k-Maroon-46043691.html R.K. Maroon is a seed-stage web-oriented…

    • 438 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Finance Mini Case

    • 733 Words
    • 3 Pages

    Mini Case Report – The Dilemma at Day-Pro 1) PayBack Period for Synthetic Resin and Epoxy Resin: Synthetic Resin PBP = 2 + 250/200 = 2.5 years Epoxy Resin PBP = 1 + 200/400 = 1.5 years To show that using the Payback Period to evaluate the projects is flawed, Tim can argue that the PayBack Period ignores the time value of money, requires an arbitrary cutoff point, ignores cash flows beyond the cutoff date, and is biased against long-term projects, such as research and development, and new projects…

    • 733 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Download Ebook Corporate Finance 9th Edition Mini Case Solutions PDF at Online Ebook Library CORPORATE FINANCE 9TH EDITION MINI CASE SOLUTIONS PDF Download: CORPORATE FINANCE 9TH EDITION MINI CASE SOLUTIONS PDF Are you seeking Ebook CORPORATE FINANCE 9TH EDITION MINI CASE SOLUTIONS PDF?. Acquiring Ebook Corporate Finance 9th Edition Mini Case Solutions PDF is easy as well as easy. Mostly you have to spend much time to browse on search engine and also does not get Ebook Corporate Finance 9th Edition…

    • 1596 Words
    • 9 Pages
    Satisfactory Essays
  • Satisfactory Essays

    http://helpyoustudy.info Chapter 01 - Introduction to Corporate Finance Chapter 01 Introduction to Corporate Finance Answer Key Multiple Choice Questions 1. Which one of the following terms is defined as the management of a firm 's long-term investments? A. working capital management B. financial allocation C. agency cost analysis D. capital budgeting E. capital structure Refer to section 1.1 AACSB: N/A Difficulty: Basic Learning Objective: 1-1 Section: 1.1 Topic: Capital budgeting…

    • 82689 Words
    • 331 Pages
    Satisfactory Essays
  • Powerful Essays

    Solutions Manual Fundamentals of Corporate Finance 9th edition Ross, Westerfield, and Jordan Updated 09-29-2010 CHAPTER 1 INTRODUCTION TO CORPORATE FINANCE Answers to Concepts Review and Critical Thinking Questions 1. Capital budgeting (deciding whether to expand a manufacturing plant), capital structure (deciding whether to issue new equity and use the proceeds to retire outstanding debt), and working capital management (modifying the firm’s credit collection policy with its customers)…

    • 122989 Words
    • 492 Pages
    Powerful Essays
  • Better Essays

    Finance-Mini Case

    • 1132 Words
    • 5 Pages

    Chapter 8. Mini-Case Assume that you have just been hired as a financial analyst by Triple Play Inc., a mid-sized California company that specializes in creating high-fashion clothing. Because no one at Triple Play is familiar with the basics of financial options, you have been asked to prepare a brief report that firm’s executives can use to gain a cursory understanding of the topic. To begin, you gathered some outside materials on the subject and used these materials to draft a list of pertinent…

    • 1132 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Mini-Case - Finance

    • 1287 Words
    • 6 Pages

    In order to decide on an IPO price, we must look at the current financial position of the company, as well as make projections for possible future scenarios. From the data given, we know that Prairie Home Stores (PHS) has a current book value of $80,000,000. With 400,000 outstanding shares, the book equity per share is $200. There are two possible paths for future performance to consider. The first, a constant growth scenario, assumes that PHS will continue on its current trajectory of paying…

    • 1287 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Corporate Finance and Case

    • 1922 Words
    • 68 Pages

    Corporate Finance (MBA) FIN 502 School of Business SB328 amuslumov@ada.edu.az ADA University School of Business Syllabus for Corporate Finance (FIN 502) MBA Program Mission ADA’s School of Business mission is to prepare global and socially responsible graduates through excellence…

    • 1922 Words
    • 68 Pages
    Good Essays