1. Calculate the risk appropriate level of return. 2. Determine whether the stock is undervalued or overvalued. ? - Sign In Do Saf Undervalued/Overvalued Stock - Excel FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW 4 Calibri 111 F A = % D Paste B I U - - A - Alignment Number Conditional Format as Cell Formatting Table Styles Clipboard to Font Styles A1 x V fix Cells Editing A1 A B A manager believes his firm will earn a 16.50 percent return next year. His firm has a beta of .64, the expected return on the market is 14.40 percent, and the risk-free rate is 5.40 percent. Compute the return the firm should earn given its level of risk. Determine whether the manager is saying the firm is undervalued or overvalued. Expected return next year Firm beta Expected return on the market Risk-free rate 16.50% 0.64 14.40% 5.40% Compute the expected return and determine whether the manager is saying the firm is undervalued or overvalued. (Do not round intermediate calculations and round your answers to 2 decimal places.) Risk appropriate level of return Undervalued, overvalued, or fairly valued