Milton Data Service just paid a dividend of $4.00 per share on its common stock. The dividend is expected to grow at 4% per year forever. Currently, the risk-free rate is 5%, the expected market return is 10%, and Milton has a beta of 1.4.

a. What should be the current market price per share (i.e., the intrinsic value) of Milton stock?

b. If the actual market price per share is $56, is Milton undervalued or overvalued? How much is the stock mispriced?