Milton Data Service just paid a dividend of $4.00 per share on its common stock. Thedividend is expected to grow at 4% per year forever. Currently, the risk-free rate is 5%,the expected market return is 10%, and Milton has a beta of 1.4.a. What should be the current market price per share (i.e., the intrinsic value) of Miltonstock?b. If the actual market price per share is $56, is Milton undervalued or overvalued?How much is the stock mispriced?
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