The video game shop company GameCont is trading at a price of $130 per share. Investors expect the dividend of the company to grow at 6% per annum (per year) over the next 5 years. After that, they expect that dividend growth will increase to 7%. The company's last paid dividend is $1 per share. Investors expect the required return to be 12% per annum for the first 5 years and then drop to 10% after that. Which ONE of the following is true?

The stock is overpriced by the market and the stock price exceeds intrinsic value by more than $100.

The stock is correctly priced by the market. The stock is overpriced by the market and the stock price exceeds intrinsic value by less than $100.

(Tick here if you think that none of the statements is true.)

The stock is underpriced by the market and the intrinsic value exceeds the stock price more than $100.