Current Attempt in Progress Ivanhoe Company is considering the acquisition of Tamarisk, Inc. To assess the amount it might be willing to pay, Ivanhoe makes the following computations and assumptions. A$.$ Tamarisk, Inc. has identifiable assets with a total fair value of $\backslash (\backslash$$ $6,022,000\backslash )$ and liabilities of $\backslash (\backslash$$ $3,702,000\backslash ).$ The assets include office equipment with a fair value approximating book value, buildings with a fair value $\backslash (25\backslash \%\backslash )$ higher than book value, and land with a fair value $\backslash (50\backslash \%\backslash )$ higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Tamarisk, Inc. B$.$ Tamarisk, Inc's pretax incomes for the years $2020$ through $2022$ were $\backslash (\backslash$$ $470,200,\backslash$$ $570,200\backslash ),$ and $\backslash (\backslash$$ $373,800\backslash ),$ respectively. Ivanhoe believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments for the following items included in pretax earnings: C$.$ The normal rate of return on net assets for the industry is $\backslash (15\backslash \%\backslash ).$ Your answer is incorrect.

Assume that Ivanhoe feels that it must earn a $20\backslash \%$ return on its investment, and that goodwill is determined by capitalizing excess earnings. Based on these assumptions, calculate a reasonable offering price for Tamarisk, Inc. Indicate how much of the price consists of goodwill. $($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $0$ decimal places e$.$g$.58,971.)$

Goodwill

$\backslash$$

Offering price

$\backslash$$

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Attempts: $1$ of $2$ used

$($b$)$

Your answer is incorrect.

Assume that Ivanhoe feels that it must earn a $15\backslash \%$ return on its investment, but that average excess earnings are to be capitalized for five years only. Based on these assumptions, calculate a reasonable offering price for Tamarisk, Inc. Indicate how much of the price consists of goodwill. $($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $0$ decimal places e$.$g$.58,971.)$

Goodwill

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$\backslash$$

$\backslash ]$

Offering price

$\backslash$$

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