A manager believes his firm will earn a $14$ percent return

next year. His firm has a beta of $1\mathrm{.}5,$ the expected return on the

market is $12$ percent, and the risk$-$free rate is $4\mathrm{.}0$ percent.

Compute the return the firm should earn given its level of risk and

determine whether the manager is saying the firm is undervalued or

overvalued.