ABC investment club wants to buy the stock of either TechSoft Inc. or A&E Corp. In this connection, HKBU s investment club prepared the following table. You have been asked to help them interpret the data, based on your forecast for a healthy economy and a strong stock market over the next 12 months.

TechSoft Inc. A&E Corp. S&P 500 Index

Current price $30 $32

Industry Computer software Capital goods

P/E ratio (current) 25 14 16

P/E ratio

(5-year average) 27 16 16

P/B ratio (current) 10 3 3

P/B ratio

(5-year average) 12 4 2

Beta 1.5 1.1 1.0

Dividend yield 0.3% 2.7% 2.8%

Recommend and justify a more appropriate dividend discount model for valuing^- TechSoft's common stock.