An analyst uses the financial statements of Advanced Instruments to generate the following estimates:
Book Value per share = 4.00
Dividend retention ratio = 75%
ROE = 17%
If the required rate of return is 15%, and the current share price is $7.56 per share, the stock (using a single-stage residual income model) is most likely: A. undervalued. B. overvalued. C. correctly valued.
