Cullumber Company is considering the acquisition of pharaoh Inc. sets the amount it might be willing to pay Cullumber makes the following computations and assumptions.

Pharaoh Inc as identifiable assets with the total fear value of $$6,024,000$ and liabilities of $$3,717,000.$ The assets include office equipment with a fair value approximating book value buildings with a fair value $25\%$ higher than Book value and land with a fair value $50\%$ higher than book value. value the remaining lives of the assets are deemed to be approximately equal to those used by Pharoah Inc.

Pharoah pre$-$tax incomes for the years $2020$ through $2022$ or $$471,200,$ $$573,900$ and $$370,500$ respectively. Cullumber believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. however it may need to consider adjustments for the following items included in free tax earnings:

depreciation on buildings each year $383,200$

depreciation on equipment each year $$33,300$

extraordinary loss year $2022133,600$

salary expense each year $$173,800$

the normal rate of return on net assets for the industry is $15\%$

Assume that Cullumber feels that it must earn a $20\%$ return on its investment and that Goodwill is determined by a capitalizing excess earnings. based on these assumptions calculate a reasonable offering price for Pharoah Inc. Indicate how much of the price consists of Goodwill.

Now assume that Cullumber feels that it must earn a $15\%$ return on its investment but that average earnings are to be capitalized for $5$ years only. based on these assumptions calculate a reasonable offering price for Pharoah Inc. Indicate how much of the price consists of goodwill.