Question: Problem 8-04 You have been reading about the Madison Computer Company (MCC), which currently retains 15 percent of its earnings ($6 a share this year).
Problem 8-04 You have been reading about the Madison Computer Company (MCC), which currently retains 15 percent of its earnings ($6 a share this year). It earns a ROE of almost 31 percent a. Assulning a required rate of return of 12 percent, how much would you pay for MCC on the basis of the earnings multipler model? Do not cound intermediate calculations Round your answer to the nearest cent. Enter zero if the obtained answer is economically meaningless b. What would you pay for Madison Computer if its retention rate was 64 percent and its ROE was 15 percent) Do not round Intermediate calculations. Round your answer to the nearest cent Enter zero if the obtained answer is economically meaningless
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