Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets thantheir current fair value. Suppose thvalue of $22at Target Co had operating income of $58,300 and net assets with a fair2,000. Takeover Co. pays $318,000 for Target Co's net assets and business activitiesRequireda. How much goodwill will result from this transaction?Goodwill$ 96,000b. Calculate the ROI for Target Co. based on its present operating income and the fair value of its net assetsRound your percentage answer to 2 decimal places.)ROI3%c. Caiculate the ROI that Takeover Co, vill earn if the operating income of the acquired net assets continues tobe $58,300 (Round your percentage answer to 2 decimal places)RO

Question
Asked Feb 20, 2019

Please provide detailed instructions to help me solve this problem .. I’m confused on solving both the ROI. I need the instructions and formulas.

Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets than
their current fair value. Suppose th
value of $22
at Target Co had operating income of $58,300 and net assets with a fair
2,000. Takeover Co. pays $318,000 for Target Co's net assets and business activities
Required
a. How much goodwill will result from this transaction?
Goodwill
$ 96,000
b. Calculate the ROI for Target Co. based on its present operating income and the fair value of its net assets
Round your percentage answer to 2 decimal places.)
ROI
3%
c. Caiculate the ROI that Takeover Co, vill earn if the operating income of the acquired net assets continues to
be $58,300 (Round your percentage answer to 2 decimal places)
RO
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Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets than their current fair value. Suppose th value of $22 at Target Co had operating income of $58,300 and net assets with a fair 2,000. Takeover Co. pays $318,000 for Target Co's net assets and business activities Required a. How much goodwill will result from this transaction? Goodwill $ 96,000 b. Calculate the ROI for Target Co. based on its present operating income and the fair value of its net assets Round your percentage answer to 2 decimal places.) ROI 3% c. Caiculate the ROI that Takeover Co, vill earn if the operating income of the acquired net assets continues to be $58,300 (Round your percentage answer to 2 decimal places) RO

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Expert Answer

Step 1

Meaning of goodwill: Goodwill is the reputation of the business name. this help to generate the income of the business. Example apple is brand name.

Step 2

Calculation of goodwill: when a company purchase another company and pay more than of its assets than extra amount paid by the company is called goodwill.

Calculation of goodwill = Amount Paid by the company – acquire assets

                                          = 318,000 - 222,000

                                          = $ 96,000

Step 3

Return of investment = Return of investment means those return which is earned by the company after...

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