Question 8 is based on the following information:

The Graham Corporation is negotiating to purchase the Peckham Corporation. Both compa- nies have agreed that goodwill exists and should be a part of the purchase price.

During the past five years, the Peckham Corporation has had the following net assets and reported net income.

Reported Year 20X1 20X2 20X3 20X4 20X5

Net Assets

$425,000 475,000 505,000 543,000 592,000

Net Income

$64,000 67,000 79,000 82,000 88,000

The companies have agreed that Peckham's goodwill es equal to the average annual excess

net income of the past five years multiplied by a agreed upon number of 3. The average

net assets for the past five years are to be used in computing the amount of goodwill. There's an average rate of return of 12% in Peckham's type of business.

REQUIRED: Using the above information, calculate the goodwill for the Peckham Corporation. Then answer the following question. DO NOT send your calculations to us.

8. The goodwill attributable to the Peckham Corporation is

A. $14,880. C. $60,960.

B. $45,120. D. $81,120.