You are trying to forecast the expected level of aggregate Toronto stockmarket for the next year.

You are trying to forecast the expected level of aggregate Toronto stockmarket for the next year. Suppose the current T-Bill rate is 4%, and the yield tomaturity for the 10-year Canada bonds is 5% per year, the expected rate of inflation is2% per year, and the expected EPS for the S&P/TSX composite is $450. What is yourforecast level, assuming 3.5% risk premium (difference between corporate earningsyield and 10-year government bond)?