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Requirement: Double space, minimum 3 pages (use the knowledge of PPT i provided ——business valuation as a going concern type )
Ten years ago Tom Civil purchased a former corner store property, for the price of $80,000, located in the small town of Kinkville, Nova Scotia, and renovated the old building on the property and started a coffee shop (a sole proprietorship operating under the business name “Civilized Coffee Services†or “CCSâ€Â). There are two other coffee shops in town, but Tom’s business does well (over the years he becomes friends and acquaintances with most of the local Kinkville “mucky-mucksâ€Â) and in the past five (5) years his business has an EBITDA (i.e. earnings before interest, taxes, depreciation and amortization) of the following:
2016 $32,000
2015 $23,000
2014 $19,000
2013 $15,000
2012 $26,000
The assets of the business consist of the above mentioned land, building, inventory and equipment, which have the following book and market values:
The most recent financial statements of CCS, as of February 2017, show owner’s equity of $42,000.
Tom offers to sell the business as a going concern, including the land other assets, to his close friend Laura Rose for $150,000, and Laura comes to you, a certified business valuator, for your opinion on this price. What do you think? Write an opinion letter to Laura. Justify your answer.
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