Question: The exhibit below illustrates selective balance sheet information for two companies in the farming industry: Exhibit Company A* Company B** Current assets $450,000 $352,350 Noncurrent

The exhibit below illustrates selective balance sheet information for two companies in the farming industry:

Exhibit

Company A* Company B**

Current assets $450,000 $352,350

Noncurrent assets $925,000 $895,000

Current liabilities $125,120 $105,000

Noncurrent liabilities $50,050 $63,100

Market share price $145.80 $52.10

Number of shares 10,000 12,500

*The book value of assets and liabilities equal their respective market value.

**The book value of Company Bs noncurrent assets is 10% greater than market value.

Using the asset valuation model, which of the following conclusions is most likely valid?

A. Relative to B, company A is favorably valued.

B. Relative to A, company B is favorably valued.

C. An investor will be indifferent between the two companies.

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