Consider the stocks of the company Gamma, their expected price after 10 years is 100. We also expect that the company will distribute three tranche of dividends of 5 at the end of the third, sixth and 9th year (t =3,6,9). The discount rate of the cash flows (i.e. the annual expected return) is 12%.

1. Which is the fair value of the stock?
2. If the current price is equal to 42, are you going to buy or to sell the stock? And if the price is 38?