Step $5-$ Compare the Required Rate of Return with the Potential Rate of Return on the Investment

After calculating your required rate of return $($in step $3)$ and the potential rate of return on an investment $($in step $4),$ you can compare these two values to determine whether the stock would be a good value for you to buy at the current price. If the potential return on an investment is greater than your required rate of return, the stock may be underpriced, and it might be a good investment at the current price.

In the example involving CQ Telecommunications, which value is higher?

The required rate of return $($from step $3)$

The stock$$s potential rate of return $($from step $4)$

Therefore, CQ Telecommunications stock $$a good investment $($that is$,$ an undervalued investment$)$ at the current market price of $$20$ per share.