I don't understand this. Please thoroughly explain. Im trying to complete with paper and pencil. Please fully explain how I show calculate not understanding how. Trying to carry all calculations to two decimal places.

P$7-26$ ETHICS PROBLEM Melissa is trying to value the stock of Generic Utility Inc., which is

clearly not growing at all. Generic declared and paid a $$5$ dividend last year. The required return

for utility stocks is $11\%,$ but Melissa is unsure about the financial reporting integrity of Generic's

finance team. She decides to add an extra $1\%{?}^{?}$ credibility" ${?}^n$ 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?