Nigel Corporation is interested in purchasing Lau Company Ltd. The total of Lau?s net income amounts over the last five years is $750,000. During one of those years, Lau reported a gain on discontinued operations of $94,000. The fair value of Lau's net identifiable assets is $690,000. A normal rate of return is 15%, and Nigel wants to capitalize excess earnings at 20%. Calculate the estimated value of Lau?s goodwill.
This question was answered on: Jul 11, 2017
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