The financial analyst of the brokerage house Ganancias S.A. uses the Gordon-Shapiro model at increasing rates to determine the target price of the stocks of interest and, thus, be able to recommend its clients' investment portfolio. He considers the following data from the evaluated station:

Action B
Current value	$40
Dividend	$2.00
Required profitability	13%
Expected growth	7%

1. Calculate the target price of the stock

2. Explain what the target price represents

3. Mentions what information is obtained from the comparison of the target price against the current price of the stock

4. Makes a recommendation that the analyst could propose on the evaluated stock, assuming that it is already part of his clients' portfolio.