PLEASE SOLVE IT!

You are thinking of investing in the shares of a publicly listed company. You expect the company to pay a $1.15 dividend over the next year and you believe you can sell your shares for $19.50 in one year.

(a) If the required return on equity for this company is 9.5%, calculate the valuation for this company's shares today. (3 marks)

(b) If the current market price of these shares is $12.50, what should you do? Why? (3 marks)

(Include enough working to show you understand the calculations.)