A large, quoted company that is all-equity financed is planning to acquire a smaller unquoted company that is also all-equity financed.

The acquiring company's directors are using the dividend valuation model to value the target company before making an offer.

Relevant data for the target company:

   • Dividends paid in the last financial year           $2 million

   • Book value of net assets                                     $15 million

   • Shares in issue                                                     1 million

The acquiring company's cost of capital is 10%.

Its directors believe they can improve the target company's performance in the long term.

They estimate there will be no growth in the first year of the acquisition but from year 2 onwards there will be a 4% growth each year in perpetuity.

What is the maximum price the acquiring company should offer for each of the shares in the target company?