The stock market has been doing well. The average growth in stock prices is at 10% year over year. The companys stock (RICH) is currently priced at 150 SAR and the dividends per share will be at 3 SAR by the next quarter. Your analysts expect that the average required rate of return for investors in the market is at 8%. The current dividend growth rate for your stock has been 5%.

Apply what we learned in the course to assess whether the companys stock price is overvalued, undervalued or appropriate. If you find that it is over- or undervalued, what would you need to change for the stock to be appropriately priced?

Use Stock Valuation: Gordon Growth Model