A potential buyer is evaluating a company using the Excess Earnings Method (EEM). The company has the following financial details:
Adjusted Tangible Net Worth = $280,000
Opportunity Cost Rate = 23%
Alternative Salary the Buyer Would Earn = $38,000
Projected Net Earnings = $90,000
Years-of-Profit Figure for Intangibles = 4.2
Compute the opportunity cost of investing in the business
Compute the extra earning power
Estimate the value of intangibles
Determine the total business value
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