FOR PROFESSIONAL RESEARCH WRITER

Read the case.  Focus on the information directly given about Ragan, Inc (not its competitors) 

Show all of these steps:

• Start by computing total dividends given to the brother and sister 

• Determine total shares outstanding for brother and sister
• Determine total earnings for the company
• Determine what fraction of earnings is paid as dividends (Payout ratio)
• Then determine the fraction that is not paid as dividends (what is retained) = Retention ratio
• Calculate growth rate by using formula: g = (ROE) X (Retention Ratio)
• Determine the current dividend per share (D₀ ) based on the dividends paid and number of shares 
• Determine the value per share of the company’s stock (P₀) by using:

         P₀ = D₁ / (R – g)

        (Notice the formula uses D_1, the next year dividend, which you have to determine)