An analyst does research about price multiples and gathers the following information about three companies in the same industry:
| Earnings Retention Ratio | Required Rate of Return |
Company 1 | 30% | 8% |
Company 2 | 40% | 9% |
Company 3 | 50% | 10% |
According to dividenddiscounted model (DDM), which company most likely has the highest price-to-earnings ratio()
A. Company 1.
B. Company 2.
C. Company 3.