The Lowlight Company has a book value of $186.50 per share, and is currently trading...
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Accounting
The Lowlight Company has a book value of $186.50 per share, and is currently trading at a price of $167.00 per share. You are interested in investing in Lowlight, and have just used a present-value based stock valuation model to calculate a present (intrinsic) value of $215.00 per share for Lowlight's stock. Assuming that your calculations are correct you should?
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| buy the stock, because the current market price per share is lower than the present value. |
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| buy the stock, because the book value per share is less than the present value. |
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| not buy the stock, because the present value is greater than the market price per share. |
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| buy the stock, because the book value and the current trading price are very close to one another in value. |
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