Consider a stock currently valued at $12.75 and paying a $1.25 dividend where the required rate of return is 8 percent. Assuming no growth rate of dividends, determine the stock's current value and indicate whether it is over- or undervalued.
a. $15.63, undervalued
b. $15.63, overvalued
c. $1.56, undervalued
d. $1.56, overvalued