The net profit for Jimmy Limited is currently at $5 million. The company has 500,000 outstanding shares of preferred stock, and dividend per shares of preferred stock is $3 each year. The company just paid $2 million for the total dividend for common stock, and there are 200,000 outstanding shares of common stock.

a) Estimate the earnings per share (EPS) of the common stock for Jimmy Limited. (4 marks)

b) After analysing different financial information, you predict that the growth rate of dividend for the common stock is at 5%, and the required return rate for the common stock is at 8%. Discuss whether you would short sale the common stock of Jimmy Limited or not if the current share price for the common stock is at $340.