Sea Wave & Plc operates as a leisure travel company. The company's ships visit approximately 700 ports under the Sea Wave Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard brand names. Sea Wave expects to pay a year-end dividend of $1.60. Investors expect the growth rate in dividends to increase at a constant rate of 8 percent a year. Assume that investors require a rate of return of 15 percent for Sea Wave stock. Assume that Sea Wave's stock is currently trading at $36.

Required:

Calculate the price (intrinsic value) of Carnival stock and discuss whether this stock is over or undervalued.