West Texas Communications Inc. just paid a dividend of $2.16. The dividend is expected to grow at a rate of 3.5%. If your required rate of return on the stock is 8.0% and the stock is currently priced at $49.20, should you buy or sell?

• You should buy it: it is overvalued by $0.48.
• You should buy it: it is undervalued by $0.48.
• You should sell it: it is undervalued by $1.20.
• You should sell it: it is overvalued by $1.20.
• You should sell it: it is overvalued by $0.48.