A Stock Recently Paid a Dividend of $3 Per Share

Multiple Choice

A stock recently paid a dividend of $3 per share. Its growth rate is expected to be 8 percent. Investors require a 10 percent return. The stock is selling in the market for $140. What is this stock worth and is the stock undervalued or overvalued?

A) $162; undervalued
B) $162; overvalued
C) $150; undervalued
D) $150; overvalued