Problem Set #1A company has expected earnings over the next year of $1.50/share. The company has a beta of 2, the risk-free rate is 4% (rf = 4%), and the market risk premium is also 4%.The company is...

Problem Set #1A company has expected earnings over the next year of $1.50/share. The company has a beta of 2, the risk-free rate is 4% (rf = 4%), and the market risk premium is also 4%.The company is expected to maintain an earnings retention rate of 30%, i.e., 70% of earnings are expected to be paid out as dividends every year.If the growth rate in earnings is expected to be 3% in perpetuityWhat is the value of the stock?What is the expected holding period return over the next year?What is the expected price a year from now?If the current price of the stock is $18/share, what is the implied growth rate?(Show workings)