Please answer only question #2 and explain calculations in detail. Thanks.

CHAPTER CASE Stock Valuation at Ragan, Inc. Inc., was founded nine years ago by brother and sister Carrington and Genevieve Ragan. The company manufactures and installs commercial heat- ing, ventilation, and cooling (HVAC) units. Ragan, Inc. has experienced rapid growth because of a proprietary technology that increases the energy efficiency of its units. The company is equally owned by Carrington and Genevieve. The original partnership agreement between the siblings gave each 50,000 shares of Ragan, Inc.- Stock EPS Div. Price ROE $84 Arctic Cooling, $39 $17.83 16.00% 10.00% Inc. National .34 65 19.23 14.00 13.00 Heating & Cooling stock. In the event either wished to sell stock, the Expert HVAC 55 43 18,14 15.00 12.00 Corp. shares first had to be offered to the other at a dis- industry $.54 $49 $18.40 15.00 11.67 counted price. average Although neither sibling wants to sell, they have de- cided they should value their holdings in the company To get started, they have gathered the following infor- Expert HVAC Corporation's negative earnings per share were the result of an accounting write-off last year Without the write-off, earnings per share for the com- pany would have been $.54. mation about their main competitors: Last year, Ragan, Inc., had an EPS of $4.85 and paid a dividend to Carrington and Genevieve of $75,000 each. The company also had a return on equity of 17 percent. The siblings believe that 14 percent is an ap- propriate required return for the company