Exercise 1-1 Plantation Homes Company is considering the acquisition of Condominiums, Inc. early in 2015. To assess the amount it might be willing to p Homes makes the following computations and assumptions. A. Condominiums, Inc. has identifiable assets with a total fair value of $14,398,000 and liabilities of $8,962,000. The assets include office with a fair value approximating book value, buildings with a fair value 33% higher than book value, and land with a fair value 73% hig book value. The remaining lives of the assets are deemed to be approximately equal to those used by Condominiums, Inc. Condominiums, Inc.'s pretax incomes for the years 2012 through 2014 were $1,201,000, $1,440,000, and $1,029,000, respectively. Pl Homes believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it m consider adjustments to the following items included in pretax earnings: B. Depreciation on buildings (each year) Depreciation on equipment (each year) Extraordinary loss (year 2014) Sales commissions (each year) 880,000 45,900 273,000 233,000 C. The normal rate of return on net assets for the industry is 16%. (a) Assume further that Plantation Homes feels that it must earn a 23% return on its investment and that goodwill is determined by capitalizing earnings. Based on these assumptions, calculate a reasonable offering price for Condominiums, Inc. Indicate how much of the price consists Ignore tax effects. Goodwill $ Offering price $ Click if you would like to Show Work for this question: Open Show Work