Using the resources available at your campus or public library, select a company from the
ASX that would be of interest to you. (Hint: Pick a company that’s been publicly traded for at
least 10 to 15 years.) Obtain a copy of the latest ASX report on your chosen company. Using the
historical and forecasted data, along with one of the valuation techniques described in this
chapter, calculate the maximum (i.e. justified) price you’d be willing to pay for this share. Use
the CAPM to find the required rate of return on your share. (For this problem, use a market
rate of return of 12%, and for the risk-free rate, use the latest government bond rate.)
a. How does the justified price you computed compare to the latest market price of the
share?
b. Would you consider this share to be a worthwhile investment candidate? Explain.