KLM's most recent FCFE per sharewas $1.48, and the stock is selling today in the market for $39. The FCFEis expected to grow at a rate of 3% per year for the foreseeable future. If the return is 7% on investments with comparable risk, should you purchase the stock?

• No, because the stock is overpriced $2.00.
• Yes, because the stock is underpriced $0.89.
• Yes, because the stock is underpriced $2.00.
• No, because the stock is overpriced $0.89.