4. Please read the attached WSJ article. Then, remembering that the article was written at the end of 1992 answer the following questions. If you accept Mr. Craig's estimates on the long term growth rate and the 1994 P-E ratio, what is the required rate of return on equity of Maybelline stock? Is Mr. Craig's willingness to pay for Maybelline stock today consistent with the required rate of return on equity implicit in his estimates (the company does not pay dividends)? Compute what should be his indifference price.

*Through Sept. 30 Pro forma, as if pending stock offering had occurred Jan. 1, 1991. Assumes 17.2 million shares outstanding