Using available information about ABC Ltd, you estimate its cost of equity as 12%. This gives you a valuation of $34 per share. Since the current market price of ABC Ltds share is $50, you conclude that it is under-valued. However, to be more confident of your valuation, you decide to estimate the implied cost of equity using the companys current share price and the dividend payout (assuming a constant growth in dividend). Suppose you estimate the implied cost of equity as 12.2%.

What would your investment decision be? Use your understanding of the implied cost of equity to explain.