The Highlight Company has a book value of $56.50 per share, and is currently trading at a price of $59.00 per share
You are interested in investing in Highlight, and have just used a present-value based stock valuation model to calculate a present (intrinsic) value of $55.00 per share for Highlight's stock. Assuming that your calculations are correct you should
A) buy the stock, because the current market price per share is higher than the present value.
B) buy the stock, because the book value per share is greater than the present value.
C) not buy the stock, because the present value is less than the market price per share.
D) buy the stock, because the book value and the current trading price are very close to one another in value.
Answer: C
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