Question
Problems help needed: please provide answers on excel format Problems Chp. 11 7. Based on new information regarding the popularity of basketball, you revise your
Problems help needed:please provide answers on excel format
Problems Chp. 11
7. Based on new information regarding the popularity of basketball, you revise your growth
estimate for BBC to 9 percent. What is the maximum P/E ratio you will apply to BBC,
and what is the maximum price you will pay for the stock?
14. You have been reading about the Madison Computer Company (MCC), which currently retains
90 percent of its earnings ($5 a share this year). It earns an ROE of almost 30 percent.
a. Assuming a required rate of return of 14 percent, how much would you pay for MCC
on the basis of the earnings multiplier model? Discuss your answer.
b. What would you pay for Madison Computer if its retention rate was 60 percent and
its ROE was 19 percent? Show your work.
See attached for 2 more problems
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