A company that just paid a 3 annual dividend is currently, Financial Management

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A company that just paid a 3 annual dividend is currently

A company that just paid a $3 annual dividend is currently priced at $65. You estimate the company will grow at 5% per year for the next 3 years and then grow at 7% per year for the next 2 years before leveling off to an estimated terminal growth rate of 3%. Assume stock’s beta is 0.8, the risk-free rate is 2% and the return on the market portfolio is 9%. Based on your assumptions, is this stock undervalued or overvalued? By how much?

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