You are given information on Grand Ltd and Small $($Pty$)$ Ltd in the paragraphs below. Please read the paragraphs and answer the question that follows.

Grand Ltd is a company listed on the Johannesburg Stock Exchange. Grand$$s shares are currently quoted on the Johannesburg Stock Exchange at R$3\mathrm{.}20$ per share. The most recently published financial information indicates a price$/$earnings$($P$/$E$)$ ratio of $16$ and an earnings per share $($EPS$)$ ratio of $20$ cents per share.

Small Pty $($Ltd$)$ is a private company based in South Africa. Small $($Pty$)$ Ltd has $100000$ issued shares. Its latest financial information indicates current earnings of R$50000$ and an earnings per share $($EPS$)$ ratio of $50$ cents per share.

Grand Ltd wants to take over Small $($Pty$)$ Ltd$.$

Required:

Explain how Grand Ltd should decide on the offer price. $(15$ Marks$)$