Part A$.$

Little Tech Limited was recently sold to Big Tech, another larger tech company in the same industry. Little Tech$$s normalized expected annual future earnings are estimated to be $$250,000,$ with the fair value of its net identifiable assets at $$975,000.$ The average industry ROI is $18\%.$

Instructions

What is the estimated value of the goodwill using the excess earnings approach assuming $($show calculations$)$ the following:

a$)$ Goodwill is equal to the average excess earnings capitalized at $20\%.$

Goodwill:$\_\_\_\_\_\_\_\_\_\_\_\_\_$