(Common stockholder expected return)

Alyward & Bram common stock currently sells for $23.25 per share. The company's executives anticipate a constant growth rate of 11.7 percent and an end-of-year dividend of $1.25.

a. What is your expected rate of return?

b. If you require a return of 17 percent, should you purchase the stock?

If you require a return of 17 percent, you should (Buy or Sell) the stock because the expected rate of return is (Less than or Greater than) rate of return or the intrinsic value of the stock is (Less than or Greater than) the current market price.