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How much is the estimated goodwill

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Question - UNFLEDGED Co. is contemplating on acquiring IMMATURE, Inc. The following information was gathered through a diligence audit:

The actual earnings of IMMATURE, Inc. for the past 5 years are shown below:

-Earnings in 20x5 included an expropriation gain of 1,600,000.

-The fair value of IMMATURE's net assets as of the end of 20x5 is 40,000,000.

-The industry average rate of return is 12%.

-Probable duration of "excess earnings" is 5 years.

Required -

1. How much is the estimated goodwill using the multiples of average excess earnings method?

2. How much is the estimated goodwill using the capitalization of average excess earnings method?

3. How much is the estimated goodwill using the capitalization of average earnings method?

4. How much is the estimated goodwill using present value of average excess earnings method?

Reference no: EM132898666

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