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earnings have averaged approximately $171,200 and believes that such an amount should be capitalized over an unlimited period at a 6% rate. Whispering Winds thinks that, because of increased competition, the excess earnings of Richmond will continue for 7 years t most and that a 12% discount rate is appropriate. lick here to view Table A4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 ) How far apart are the positions of these two parties? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O mcimal places, eg. 5,275)

earnings have averaged approximately $171,200 and believes that such an amount should be capitalized over an unlimited period at a 6% rate. Whispering Winds thinks that, because of increased competition, the excess earnings of Richmond will continue for 7 years t most and that a 12% discount rate is appropriate. lick here to view Table A4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 ) How far apart are the positions of these two parties? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O mcimal places, eg. 5,275)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Whispering Winds Corporation is interested in acquiring Richmond Plastics Limited. Richmond has determined that its excess earnings have averaged approximately $171,200 and believes that such an amount should be capitalized over an unlimited period at a 16% rate. Whispering Winds thinks that, because of increased competition, the excess earnings of Richmond will continue for 7 years at most and that a 12% discount rate is appropriate. Click here to view Table A4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) How far apart are the positions of these two parties? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, e.g. 5,275.) Difference
Transcribed Image Text:Whispering Winds Corporation is interested in acquiring Richmond Plastics Limited. Richmond has determined that its excess earnings have averaged approximately $171,200 and believes that such an amount should be capitalized over an unlimited period at a 16% rate. Whispering Winds thinks that, because of increased competition, the excess earnings of Richmond will continue for 7 years at most and that a 12% discount rate is appropriate. Click here to view Table A4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) How far apart are the positions of these two parties? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, e.g. 5,275.) Difference
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