A manager believes his firm will earn a return of $21\mathrm{.}80$ percent next year. His firm has a beta of $1\mathrm{.}73,$ the expected return on the market is $19\mathrm{.}00$ percent, and the risk$-$free rate is $8\mathrm{.}00$ percent.

Compute the return the firm should earn given its level of risk. $($Round your answer to $2$ decimal places.$)$

Determine whether the manager is saying the firm is undervalued or overvalued.

multiple choice

overvalued

undervalued