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Help please !!!! Pierre Company is considering the acquisition of Carlo Inc. To assess the amount it might be willing to pay, Pierre makes the

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Pierre Company is considering the acquisition of Carlo Inc. To assess the amount it might be willing to pay, Pierre makes the following computations and assumptions. A. Carlo Inc. has identifiable assets with a total fair value of $4,500,000 and liabilities of $3,500,000. 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. The remaining lives of the assets are deemed to be approximately equal to those used by Carlo Inc. B. The normal rate of return on net assets for the industry is 15%. C. Carlo Inc.'s pretax incomes for the years 2009 through 2011 were $310,000, $370,000, and $440,000, respectively. Pierre 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 pretax earnings: Depreciation on Buildings (each year) $200,000 Depreciation on Equipment (each year) 10,000 Extraordinary Loss (year 2011) 80,000 Salary Expense (each year) 170,000 What is the amount of normal earnings for similar firms? $690,000 $644,000 $195,000 $150,000 What is the amount of the adjusted earnings of Carlo Co. for year 2009? * $665,000 $750,000 $260,000 $400,000 What is the amount of the adjusted earnings of Carlo Co. for year 2010? $320,000 $950,000 $865,000 $470,000 What is the amount of the adjusted earnings of Carlo Co. for year 20112* $820,000 $636,000 $480,000 $470,000 What is the amount of the excess earning per year of Carlo Co.? $255,000 $78,000 $150,000 $200,000 What is the amount of the estimated goodwill of Carlo Co. if Pierre feels that it must earn a 20% return on its investment, and that goodwill is determined by capitalizing excess earnings ? $1,275,000 O $195,000 $1,000,000 $750.000 Assume the estimated goodwill is $800,000, What is the amount of the offering price of Carlo Co.?* $1,700,000 $1,800,000 $5,400,000 $5,600,000 What should be the amount of pretax income of Carlo Co. for year 2009, if all other information are the same and the excess earning per year is $250,000? $906,000 $605,000 $721,000 $460,000

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