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PLEASE SHOW WORK Stock A is selling for $40 per share, has an expected growth...

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Accounting

PLEASE SHOW WORK

Stock A is selling for $40 per share, has an expected growth rate of 8 percent, is expected to pay a dividend of $4 per share next year, and its beta is estimated to be 2.00.The risk-free rate of interest is 4 percent and the market risk premium is 5 percent.

A.If the expected inflation rate is expected to return to 1 percent, but the market risk premium increases to 7 percent, what is the risk-free rate of interest?

What is the expected return on the market?4%; 11%

B. If the expected inflation rate is expected to remain at 1 percent and the market risk premium is 7 percent, is Stock A over, under, or correctly valued at a market price of $40?correctly valued

C. If the expected inflation rate is expected to remain at 1 percent and the market risk premium is 7 percent, what is Stock As equilibrium price?$40

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