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Is Seek fairly valued on the ASX

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Reference no: EM133113760

Question - Consider the following information regarding Seek Ltd (ASX:SEK) in Australia.

Year 0

Year 1

Year 2

EPS

$1.45

$1.67

DPS

$0.61

$0.68

Book Value of Share

$19.00

Required Equity Return

5%

Share Price on ASX

$21

Required -

a) Assuming Seek will close operations in 2 years' time, value an ordinary share in this company using the Residual Income Method.

b) Is Seek fairly valued on the ASX? Please explain fully your response.

Reference no: EM133113760

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