(Preferred stock valuation) You own 300 shares of Somner Resources' preferred stock, which currently sells for $58 per share and pays annual dividends of $5.20 per share. If the market's required yield on similar shares is 7 percent, should you sell your shares or buy more? a. The value of the stock to you is $ per share. (Round to the nearest cent.) b. Should you sell your shares or buy more? (Select from the drop-down menus.) You because the stock is currently in the market. should sell the shares overpriced should buy more shares underpriced (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: the investor's required rate of return is 14 percent, the expected level of earnings at the end of this year (E1) is $8, the firm follows a policy of retaining 50 percent of its earnings, the return on equity (ROE) is 14 percent, and similar shares of stock sell at multiples of 7. 143 times earnings per share. Now show that you get the same answer using the discounted dividend model. a. The stock price using the P/E ratio valuation method is $ (Round to the nearest cent.) b. The stock price using the dividend discount model is $ (Round to the nearest cent.)