Reflect the growth of the company

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We disagreed on using the operating profit before officer salary in 1981 for the operating profit of the forecasted earnings since it cannot reflect the growth of the company. Moreover. we would like to adjust the Federal Tax Income based on the deficiency that mentioned in the letter from the accountant to adjust the earnings in terms of lRS's audit due to the unreasonable compensation that Mr. Elson made in the past. Hence. there will be some modifications on the Future Earnings Capability. We computed the Operating profit based on the previous years profits' percentage change and the Federal tax income deficiency to come up with four earnings scenarios (Spreadsheet) with earnings of $218, $237. $128 and negative $46 (in thousands) for alternatives 0.1.2.3 relatively. After multiplying them with the PIE ratio of 4.5x based on the adjustment of in exhibit 4. we got the value of the company for each alternatives in which under alternative 0. 1. 2. 3. the value of the company is $981. $1067. $575. and negative $206 relatively (in thousands). In the end. We averaged the scenarios' results to get the value of $604,000 which is around $600,000 starting ask price from NY Bank.

Reference no: EM133067773

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