You have an opportunity to invest in $2$ stocks:

a$)$ Stock $A$ is expected to have a price of $50,000JPY$ in one year from today $(P_1)$ with an expected dividend payment of $6,800JPY.$ The expected $($market$)$ return rate is $3\%.$

b$)$ Stock B is expected to have a price of $46,000JPY$ in $2$ years from today $(P_1)$ and an expected dividend payment of $7,000JPY.$ The expected $($market$)$ return rate is $5\%.$ What is the Present Value $($intrinsic value$)$ of the stock today $(P_0)?$

If Stock A has a market price today of $42,000JPY$ and Stock B has a market price of $50,000$ today are they overvalued or undervalued? If you would already own these stocks would you buy more of them or sell them?

$2.$ A company plans to pay dividends of $12,000JPY$ a year from today. The expected increase $($growth$)$ of its dividends is $5\%$ per year and the market requires a $7\%$ rate of return. How much should the stock be selling for?