The Matilda Corporation purchased Goodwill Company, which belongs to the dairy industry.

Given the following information for Goodwill Company, Matilda asked you to compute the

proposed purchase price.

Date of acquisition

Reported profit of Goodwill Company

$2021$

$2022$

$2023$

January $1,2024$

P $8,000,00010,000,00015,000,000$

Normal average rate of return on assets in

the dairy industry for the last $3$ years

Net identifiable assets of Goodwill on

January $1,2024$

$9\%$

P$100,000,000$

REQUIRED:

Compute the goodwill and the proposed purchase price under each of the following

assumptions:

$($a$)$ Excess average earnings shall be capitalized at $20\%$

$($b$)$ Excess average earnings shall continue for the next $8$ years.

$($c$)$ Excess average earnings shall continue for the next $8$ years, and appropriate discount rate is

$9\%.$