You are given the following stock information and are also told that the zero-beta return (?₀) = 1%, and the risk premia are ?₁ = 4%, ?₂ = 2%. Assume that all three stocks are currently priced at $15. (see following table)

The new prices now (today) for stocks A, B and C that will not allow for arbitrage profits are:___________

My question here is how to calculate the price that will not allow arbitrage:

I already did the return calculation:

A: E(r)=1%+4%*2.5+2%*0.8=12.6%

B:E(r)=1%+4%*(-0.5)+2%*4.5=8%

C: E(r)=1%+4%*3.2+2%*(-1.2)=11.4%

I have two ways to calculate, but they gave me different answers,

First method:

P_A*(1+12.6%)=16.5, P_A=14.65

P_B*(1+8%)=16.5, P_B=15.27

P_c*(1+11.4%)=16.5, P_c=14.81

Second method:

(16.5-P_A+1)/P_A=12.6%, P_A=15.54

(16.5-P_B+0.5)/P_B=8%, P_B=15.74

(16.5-P_c+1.75)/P_c=11.4%, P_C=16.38

Which one is correct?Why?