(Common stockholder expected return) Alyward & Bram common stock currently sells for $22.75 per share. The company's executives anticipate a constant growth rate of 9.5 percent and an end-of-year dividend of $2.75.

a. What is your expected rate of return?

b. If you require a return of 17 percent, should you purchase the stock?

If you require a return of 17 percent, you should (sell/buy) the stock because the expected rate of return is (greater than/less than) your required rate of return or the intrinsic value of the stock is (greater than/less than) the current market price. (Select from the drop-down menus.)

(Common stock valuation) Herrera Motor Inc. paid a $3.75 dividend last year. At a constant growth rate of 6 percent, what is the value of the common stock if the investors require a rate of return of 22 percent?

The value of the Herrera Motor common stock is $_____. (Round to the nearest cent.)