Q8.1 Using the resources available at your campus or public library, select a company from Value Line that would be of interest to you. (Hint: Pick a company that's been publicly traded for at least 10 to 15 years and avoid public utilities, banks, and other financial institutions.) Obtain a copy of the latest Value Line report on your chosen company. Using the historical and forecasted data reported in Value Line, along with one of the valuation techniques described in this chapter, calculate the maximum (i.c., justified) price you'd be willing to pay for this stock. Use the CAPM to find the required rate of return on your stock. (For this problem, use a market rate of return of 12%, and for the risk-free rate, use the latest 3-month Treasury bill rate.)

a. How does the justified price you computed compare to the latest market price of the stock?

b. Would you consider this stock to be a worthwhile investment candidate? Explain.