ETHICS PROBLEM Melissa is trying to value Generic Utility, Inc.'s stock, which is clearly not growing at all. Generic declared and paid a dividend of $9 last year. The required rate of return for utility stocks is 6%, but Melissa is unsure about the financial reporting integrity of Generic's finance team. She decides to add an extra 1% "credibility" risk premium to the required return as part of her valuation analysis. a. What is the value of Generic's stock, assuming that the financials are trustworthy? b. What is the value of Generic's stock, assuming that Melissa includes the extra 1% "credibility" risk premium? c. What is the difference between the values found in parts a and b, and how might one interpret that difference? a. The expected value of Generic's stock, assuming that the required rate of return for utility stocks is applicable to Generic Utility, Inc., is $ (Round to the nearest cent.) $ b. The expected value of Generic's stock, assuming that Melissa includes the extra 1% "credibility" risk premium, is (Round to the nearest cent.) c. Comparing the findings in parts a and b, the amount the expected value of the stock, if Melissa includes a credibility premium in her calculations, will be less than when assuming the required rate of return for utilities is $. (Round to the nearest cent.) Based on your answer above, judge whether the following statement is true or false? (Select the best answer below.) Lack of integrity may hurt stock prices because of the "credibility premium." False True