Mayfield Real Estate Development is a company that owns and operates a number of real estate ventures. The company also engages in real estate acquisitions and sales of properties, some of which are properties the company no longer wishes to operate. Similar real estate firms earn a 15-percent rate of return. Mayfield reported the following earnings over the last five years:

Prepare a business valuation report for Mayfield Real Estate Development using the income statement method.

Provide analysis for giving equal weights to the five years of earning data versus giving greater weight to the more recent earning periods (where five is more recent).

Given the type of industry Mayfield Real Estate Development is in, do you believe 5 years of financial information is sufficient to provide an accurate picture?

Year Operating Income Gain(Loss) on Sale of Assets Net Income 1 $1,000,000 $700,000 $1,700,000 2 $600,000 $2,100,000 $1,500,000 $1,100,000 3 $1,500,000 4 $1,600,000 $400,000 (200,000) (400,000) $1,400,000 5 $1,800,000 $1,400,000