Midler Cosmetics in Problem P11-55B holds significant promise for carving a niche in its industry. In P11-55B, the following information was taken from the records of Midler Cosmetics, Inc., at December 31, 2014:

A group of Irish investors is considering purchasing the company€™s outstanding common stock. Midler€™s stock is currently selling for $ 38 per share. A Better Life Magazine story predicted the company€™s income is bound to grow. It appears that Midler can earn at least its current level of income for the indefinite future. Based on this information, the investors think that an appropriate investment capitalization rate for estimating the value of Midler€™s common stock is 7%. How much will this belief lead the investors to offer for Midler Cosmetics? Will Midler€™s existing stockholders be likely to accept this offer? Explain youranswers.

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Dividends on common stock... $37,000 debit to Rctained Earning. $ 9,300 rest expens25,000 10,400 16,000 Prior-period adjustment-net of taxes Income tax expense (saving) Gain on lawsuit settlement. .35,950 Dividend revenue Continuing operations. Income from discontinued opcrations.... Extraordinary loss.4,300 Treasury stock, common 15,000 Geral expenses..81,000 628,000 6,100 (5,000 shares at cost). Sales reycnuc Income from discontinued Preferred stock, 6%, $30 par, Extraordinary los.14,000 Retained carnings, beginning, 20,000 as originally reported202,000 Selling expenses... 36,000 shares authorized Cost of goods sold314,200 390,000