Management at

Winters Co. is trying to establish a share price for each of the following

companies that are potential targets for a takeover

:

Grand Co. Try Co.

Net assets 30,000,000 $42,000,000

Current net income 11,000,000 14,000,00

Number of shares out 5,500,000 7,500,000

Current total annual dividends$ 2,890,000 3,680,000

The industry average for the price-

earnings (P/E) ratio is 7.8, and the industry average

for the dividend yield is 3.5%.

Required:

Calculate the estimated value per share for Grand Co. and Try Co. using the following

methods:

a) Dividend yield method

b) P/E ratio method