A share of stock with a beta of 0.85 now sells for $60. Investors expect the stock to pay a year-end dividend of $3 and expect dividends to grow at a rate of 3%. The T-Bill is 6% and the market risk premium is 9%. Is the stock undervalued or overvalued?

Er = rf + (rm rf) = 6% + 0.85(9%) = 13.65%

Expected Price = D1 / (Er g) = 3 / (13.65% - 3%) = 82.19 Undervalued

** I don't understand how the answer they got was 82.19, so can you please explain it to me. Thank you!