Buying An Existing Business

Aug 15, 2014

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Buying An Existing Business. For Sale. Excess Earnings Method. (Continued). Step 4 : Compute extra earning power (EEP):. EEP = Projected Net Earnings - Total Opportunity Costs. = $74,000 - 65,078 = $8,922. Step 5 : Estimate the value of the intangibles ("goodwill"):.

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Buying An Existing Business

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Buying An Existing Business For Sale
Excess Earnings Method (Continued) Step 4: Compute extra earning power (EEP): EEP = Projected Net Earnings - Total Opportunity Costs = $74,000 - 65,078 = $8,922 Step 5: Estimate the value of the intangibles ("goodwill"): Intangibles = Extra Earning Power x "Years of Profit" Figure* = 8,922 x 3 = $26,766

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