283. The following information relates to two companies, A plc and B plc.
A plc B plc
Earnings after tax $210,000 $900,000
P/E ratio 16 21
B plc’s management estimate that if they were to acquire A plc they could save $100,000 annually after tax on administrative costs in running the new joint company. Additionally, they estimate that the P/E ratio of the new company would be 18. On the basis of these estimates, what is the maximum that the shareholders of B plc should pay for the entire share capital of A plc? (To the nearest million)