c)Assuming that ROCE (return on common equity), g (the growth rate of the book value of common shareholders equity) and rE (the cost of equity capital) are constant, that markets are efficient, and:the companys dividend payout ratio d is 20%,g is 8%,the companys stock has an equity beta of 1.2,the risk free rate is 1% and the market risk premium is 6%,

what is the ROCE priced into the market?

Continuing with the information given in part (c), what will be the percentage effect onthe stocks intrinsic value if:

(i)the market risk premium increases to 7%;

(ii)the market expectation of the dividend payout ratio changes to 50%;

(iii)the market expectation of future ROCE changes to 9%?

Try to explain the direction and magnitude of each change.