Simmons Company is contemplating the acquisition of Ramirez Company. Simmons determines that the fair market value of Ramirez's identifiable net assets (total assets less total liabilities) is $5,214,500.

For this specific industry, 10% is considered a normal rate of return on net assets. Ramirez's earnings for the past few years have averaged $598,300.

Required:

Estimate goodwill for this transaction using the capitalization of excess earnings method.