Question from Ben Grahams Security Analysis

Hi All,

I'm extremely new to the WSO and currently work in Wealth Management. As a fundamentally & philosophically driven individual, however, it is not sufficient nor fulfilling for me to blindly except the financial recommendations of analyst without more knowledge of the process. I'm currently reading thru the 6th edition of Security Analysis and came across a question on page 67.

Graham denotes a particular publicly traded security in two instances in a discussion on Intrinsic Value.

In one instance the said stock is trading at $8 / shr with a $1/shr dividend and $2 earnings / shr. The second instance has the same stock trading at $280 / shr with a $2 / dividend and $8 earnings / shr. On the following page, Graham denotes that the value of the business when it was trading at $8/shr was 1.8mm and therefore trading beneath intrinsic value, whereas the following example denotes the market capitalization of the business at $70mm when it was trading at $280 / shr.

My question is how did he get to the ultimate values / market capitalizations of the entire business, IE the $1.8mm & $70mm, respectively?

After reading the book thus far, my gut tells me he simply ball-parked the numbers intuitively based on his prior knowledge (when calculating number of shares the first example comes out to 25,000 less shares than the second...).

Wanting to go thru this thoroughly so it doesn't go in one ear and out the other. Any help is much appreciated! Thanks, DY