Question: At her death Abigail owned 55 of the stock in

At her death, Abigail owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1.6 million, and on the date of Abigail’s death, the book value of its stock is $3.8 million. An appropriate rate of return for the type of business Finch is in is 8%.
a. Assuming that goodwill exists, what is the value of the Finch stock?
b. What factors could be present to reduce the value of such goodwill?

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  • CreatedSeptember 09, 2015
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