Bayview real estate is a company that own and operated real estate ventures. They also own and sale properites that companies no longer wishes to operste. Similar real estate firms earn a 15% rate of return. Bayview reported the following earnings over the last 5 years.

Year Operating Income Gain loss on sale of assets Net income

1 1,500,000 800,000 2,300,000

2 1,700,000 900,000 2,600,000

3 1,800,000 200,000 2,000,000

4 1,900,000 (500,000) 1,400,000

5 2,000,000 (200,000) 1,800,000

Prepare a business valuation using an earnings model:

a. Prepare your analysis giving equal weights to the five years of earnings data

b. Prepare your analysis giving greater weight to the more recent earning periods (where five is more recent)

c. What assumptions or adjustments did your make in your analysis with respect to non-operating income?