As part of a business combination, Mother Ryan company acquired a customer list and a franchise agreement.  Mother Ryan uses…

As part of a business combination, Mother Ryan company acquired a customer list and a franchise agreement.  Mother Ryan uses the expected cas flow approach for extimating the fair value of these two intangibles.  The appropriate interest rate is 8%.  The potential future cash flows from the two intangibiles, and their associated probabilities, are as follows:

Customer List

Outcome 1 17% probability of cash flows of $40,000 at the end of each year for five years

Outcome 2 29% probability of cash flows of $18,000 at the end of each year for four years

Outcome 3 54% probability of cash flows of $9,000 at the end of each year for three years

Franchise Agreement

Outcome 1 15% probability of cash flows of $450,000 at the end of each year for 10 years

Outcome 2 19% probability of cash flows of $12,000 at the end of each year for four years

Outcome 3 66% probability of cash flows of $500 at the end of each year for three years

Using the expected cash flow approach, estimate the fair value of the customer list and of the franchise agreement.  Round your calculations to the nearest whole dollar.

Total estimated fair value of the customer list   $______________

Total estimated fair value of the franchise agreement $________________

 
Looking for solution of this Assignment?

WHY CHOOSE US?

We deliver quality original papers

Our experts write quality original papers using academic databases.  

Free revisions

We offer our clients multiple free revisions just to ensure you get what you want.

Discounted prices

All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount

100% originality

We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity

On-time delivery

We will deliver your paper on time even on short notice or  short deadline, overnight essay or even an urgent essay