What is the value of the Finch stock

Assignment Help Accounting Basics
Reference no: EM132650944

Problem - At her death, Abigail owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1.6 million, and on the date of Abigail's death, the book value of its stock is $3.8 million. An appropriate rate of return for the type of business Finch is in is 8%.

Required -

a. Assuming that goodwill exists, what is the value of the Finch stock?

b. What factors could be present to reduce the value of such goodwill?

Reference no: EM132650944

Questions Cloud

Analyze impact of the CSI Effect in courtroom : Analyze the impact of the CSI Effect in the courtroom. Interpret what prosecutors can do to overcome this phenomenon.
Compute Morgan gain or loss : Problem - Clinton makes a gift of stock (basis of $600,000 and fair market value of $500,000) to Morgan. Compute Morgan's gain or loss
Prepare properly classified balance sheet for gates company : Prepare properly classified Balance Sheet for Gates Company as of December 31, 2017 with appropriate notes. Accumulated Amortization - Patents 22,000
Study material on emergence of Religious Right : After reviewing the Reading and Study material on the emergence of the Religious Right, you will gain a clearer understanding of the worldview
What is the value of the Finch stock : In the past five years, Finch has earned average net profits of $1.6 million, Assuming that goodwill exists, what is the value of the Finch stock
Referred for criminal proceedings : What conditions would have to be met before the citations could be referred for criminal proceedings? What would be the maximum fine that the company would face
Determine the amount of Dale gift : Dale (age 68) creates a trust with assets worth $5 million. Under the terms of the trust, Determine the amount of Dale's gift. Of his taxable gift
Do agree with the given statement for financial scandals : Do you agree with the given statement? Why? The recent wave of financial scandals indicates that regulators are often slow in responding
Determine the value of Arlene gifts : Arlene creates a trust with assets worth $1 million. In the month the trust is created, the interest rate is 4.2%. Determine the value of Arlene's gifts

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd