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show full calculation of i) and ii) Kennedy is the Manager of ABC Company. His contribution to the management profit is estimated at 30% of
show full calculation of i) and ii)
Kennedy is the Manager of ABC Company. His contribution to the management profit is estimated at 30% of the tatal business earnings. The shareholders of ABC believe that ABC will get a return of 5% if there is no management. It is also estimated that a 5 -year term is required to find a comparable replacement for Kennedy. ABC Company's total pre-tax profit and total net worth for the past 5 years are RM730,000 and RM3,350,000 respectively. i) Calculate the value of keyman using the contribution to earnings method. [5 marks] ii) If the current salary of Kennedy is RM15,000.00 per month, and the value of routine work of Kennedy is RM5,000.00 per month, the number of years to get a successor is 5 years, calculate the value of the keyman using the replacement cost method. [5 marks] Step by Step Solution
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