You have been reading about the Madison Computer Company (MCC), which currently retains 83 percent of its earnings ($6 a share this year). It earns an ROE of almost 30 percent.

1. Assuming a required rate of return of 12 percent, how much would you pay for MCC on the basis of the earnings multiplier model? Do not round intermediate calculations. Round your answer to the nearest cent. Use zero if the obtained answer is economically meaningless.

2. What would you pay for Madison Computer if its retention rate was 55 percent and its ROE was 17 percent? Do not round intermediate calculations. Round your answer to the nearest cent. Use zero if the obtained answer is economically meaningless. $