1. Westwood Manufacturing Company has experienced the following earnings record over the last five years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	$6,500,000	$6,800,000	$7,300,000	$ 7,500,000	$9,500,000
Cost of goods sold	3,700,000	3,900,000	4,300,000	4,400,000	6,000,000
Gross profit	2,800,000	2,900,000	3,000,000	3,100,000	3,500,000
Operating Expenses	2,350,000	2,400,000	2,450,000	2,500,000	2,600,000
Net income	$ 450,000	$ 500,000	$ 550,000	$ 600,000	$ 900,000

Westwood is a closely held company with five family members owning stock. The stock is not traded on any stock exchange and none of the shares have ever been sold after the initial sale of the stock from the company to the shareholders. One shareholder wants to sell her stock back to the company and cease any activities with the company. She owns 20 percent of the outstanding shares of the company stock. Similar companies' stock has traded with price/earnings (PE) ratios of 8, 9, 10, 11, and 9 over the past five years.

A. Using the average earnings model and using the average price/earnings ratio for similar companies for the five year period, the value of Westwood Manufacturing at the end of year five is:

B. Giving more weight to the most recent year's earnings and using the average price/earnings ratio of similar companies for the five year period, the value of Westwood Manufacturing at the end of year five is:

C. Using the average earnings model and using the price/earnings ratio for similar companies for the last two years, the value of Westwood Manufacturing at the end of year five is:

D. Using the average earnings model and using the average price/earnings ratio for similar companies for the five year period, the value of the stock that the shareholder wants to sell to the company is: