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Ivanhoe Homes Company is considering the acquistion of Tamarisk, LLc earky in 2025. To access the amount, it might be willing to pay, Ivanhoe Homes
Ivanhoe Homes Company is considering the acquistion of Tamarisk, LLc earky in 2025. To access the amount, it might be willing to pay, Ivanhoe Homes makes the following computations and assumptions. Please help me figure this one out.
Assume further that Ivanhoe Homes feels that it must earn a 25% return on its investment and that goodwill is determined by capitalizing excess earnings. Based on these assumptions, calculate a reasonable offering price for Tamarisk, Inc. Indicate how much of the price consists of goodwill. Ignore tax effects. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.) Goodwill Offering price Attempts: 0 of 2 used (b) Assume that Ivanhoe Homes feels that it must earn a 15\% return on its investment, but that average excess earnings are to be capitalized for three years only. Based on these assumptions, calculate a reasonable offering price for Tamarisk, Inc. Indicate how much of the price consists of goodwill. Ignore tax effects. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.) Goodwill Offering price $ $Step by Step Solution
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