(a)Given a risk-free rate of 5.5% and a market return of 12%, calculate ABC's required return on equity if its beta is 1.4.(b)If ABC just paid a dividend of $1.39 and these dividends are expected to grow at 5% pa, calculate an estimate of its price.(c)If ABC's current price is $23.73, what trading recommendation would you make?

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The Answer of (a)Given a risk-free rate of 5.5% and a market return of 12%, calculate ABC's required return on equity if its beta is 1.4.(b)If ABC just paid a dividend of $1.39 and these dividends are expected to grow at 5% pa, calculate an estimate of its price.(c)If ABC's current price is $23.73, what trading recommendation would you make?

(A)Given a Risk-Free Rate of 5