AJP Co is an unlisted company. The owner and manager of the business is approaching retirement and is considering the sale of his business. Financial information is as follows:

Number of ordinary shares $5,000$

Latest earnings per share $$7$

Estimated equity beta $1\mathrm{.}5$

Latest free cash flow available to the owner $$33,000($after salary payment$)$

The owner and manager pays himself an annual salary of $$200,000$ which is $$60,000$ more than could be reasonably expected for such a role.

Other relevant information:

Range of listed company price$/$earnings ratios for companies in the sector $711$

Dividend just paid $$2\mathrm{.}10$ per share

Next year$$s planned dividend $$2\mathrm{.}205$ per share

Corporation tax rate $30\%$

WACC $9\%$

Cost of equity finance $12\%$

What would be a suitable earnings figure to use for a business valuation based on the P$/$E ratio $($Answer to the nearest $$.)?$

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