Earnings of the company next year will be E1 = $5.00 per share. Assume that the company tends to plow back 50% of its earnings and pay the rest as dividends on shareholders. The expected return on market is 8%, Risk-free rate is 4%, and company's beta is 1.5

5.If instead you expect the company in the prior question to develop a key technology leading the companys growth rate to be 8% from now onwards, answer the following questions. a. What is the equilibrium (intrinsic) price of the stock? b. Suppose you observe that the stock is selling for $50.00 per share, and that this is the best estimate of its equilibrium price. What would you conclude about either (i) your estimate of the stocks required rate of return; or (ii) your estimate of the companys future growth rate? c. Suppose your 10% estimate of the stocks required rate of return is shared by the rest of the market. What does the market price of $50.00 per share imply about the markets estimate of the companys growth rate?