Two4Five Inc. just paid a dividend of $3.25. Management of the company wants to grow dividends by 5% a year starting in 2022. From regressing Two4Five's stock agains the S&P 500, you know the beta of the company is 0.75. The current risk-free rate is 4% and the S&P 500 has an expected risk premium of 6.5%.

(a) Investors are earning a 12% return from Two4Five. Based on CAPM, is the stock over, under, or fairly priced? Why?

(b) What is the intrinsic value of the stock for Two4Five Inc.?

(c) In the market, Two4Five trades at $112.00 per share. Based on your analysis in parts (a) and (b), would you recommend to buy, sell or hold the stock? Why?