Peter Corporation has just paid $X million for the total dividend to the stockholders. The net profit for the year is $10 million, and the dividend payout ratio is 80%. It is known that there are 4 million outstanding shares of common stock, and there is no preferred stock issued by Peter Corporation.

a) Calculate the total dividend ($X) and the dividend per share for the common stock. (6 marks)

b) If the required return rate for the common stock is 6%, and you predict that the constant growth rate of the dividend is 1%, discuss (with 1 or 2 sentences) with calculation that whether you would buy or sell the common stock if the current share price for the stock is $36