Remaining Time: 23 minutes. 24 seconds. Question Completion Status 25 pouts P Company is deciding whether or not to acquire S Company. The following balance sheet for S Company provides information about book values, with estimates of market values 5 s Book Values Market values Current Assets $ 700,000 $ 650,000 Property, Plant & Equipment (net) 1,900,000 1,850,000 Total Assets $2,600,000 $2,500,000 $950,000 Total Liabilities Common Stock, S10 par value Retained Earnings Total Liabilities and Equities 5900,000 600,000 1,100,000 $2,600,000 S Company's cumulative total net cash-based earnings for the past five years were $290,000, but this figure includes extraordinary cash gains of $50,000 and nonrecurring cash losses of $20,000 P Company expects a return on its investment of 13%. Assume that P estimates the total valuation of S to be equal to the present value of average annual cash-based earnings discounted to perpetuity. Hint, the offer price is average annual cash-based earnings divide by discount factor. Goodwill is then computed as the amount implied by difference between the total valuation (1.e. cash based earnings discounted to perpetuity) over the identifiable net assets valued at market values. Hint, Goodwill - Price P is willing to pay MINUS market value of net asset of S