*E12-2S (Calculate Goodill) As the president of Niagara Wineries Corp., you are considering purchasing Grimsby Wine Accessories Limited, whose statement of financial position is summarized as follows: Current assets Plant and equipment (net) Other assets Total s 240,000 825,000 285,000 Current liabilities Long-term liabilities Common shares Retained earnings Total s 210,000 550,000 440,000 150,000 The current assets' fair value is S80,000 higher than their carrying amount because of inventory undervaluation. All other assets and liabilities have book values that approximate their fair value. The normal rate of return on net assets for the industry is 15%. The expected annual earnings for Grimsby are $140,000. Instructions Assuming that the excess earnings are expected to continue for five years, how much would you be willing to pay for goodwill, and for the company? (Estimate goodwill by the present value method.)