Dan thought that the asking price of $200,000 for the metal fabrication shop was too high. Its net worth was $180,000.

Suppose Dan subsequently learned that the shop had annual pre-tax earnings of $15,000 for the past five years. Sales were primarily repeat orders from current customers. Based on the Capitalization of Earnings Method,explainwhether the asking price of $200,000 for the shop is a good deal (2 pts.).