Question: Nigel Corporation is interested in purchasing Lau Company Ltd The
Nigel Corporation is interested in purchasing Lau Company Ltd. The total of Lau’s net income amounts over the last five years is $750,000. During one of those years, Lau reported a gain on discontinued operations of $94,000. The fair value of Lau's net identifiable assets is $690,000. A normal rate of return is 15%, and Nigel wants to capitalize excess earnings at 20%. Calculate the estimated value of Lau’s goodwill.
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