PDK is selling today in the market for $68. It will pay a dividend of $2.14 per share one year from now. The dividend is expected to grow at a rate of 7% per year for the foreseeable future. If the market return is 10% on investments with comparable risk, should you purchase the share?

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Part 1

A.

Yes, because the share is underpriced $3.33.

B.

Yes, because the share is underpriced $1.33.

C.

No, because the share is overpriced $3.33.

D.

No, because the share is overpriced $1.33.