Eli Lilly has a beta of 0.51, a forward dividend per share of $2.58, and you expect it to grow in perpetuity by 5% each year. Suppose the expected return on the S&P 500 is 11% and the risk-free rate is 2.5%.

a) What should be the stock price of Eli Lilly according to the CAPM?

b) If the market price of Eli Lilly is $124.31, would you buy or sell the stock? Explain.