The Alpine Inc

question 9

Essay

The Alpine Inc.is for sale, and the sole shareholder, Billy Caprinae, is trying to determine the value of the company.The business has annual pre-tax financial profits of $55,000.The following items will be omitted in arriving at the business value as they will not pertain to the prospective buyer's objectives: donations of $2,000, personal travel of $1,500, and part-time wages to Billy's child, Rocky, of $8,000.
The store is run from a small building which has a fair market value of $105,000 (land = $45,000 and building = $60,000).The property was originally purchased for $75,000 (land = $40,000 and building = $35,000).The UCC on the building is $20,000.There is no mortgage remaining on the property.
Businesses similar to Alpine are generating a 15% rate of return.
Billy is selling the operations of the business using the earnings method, and the small store and land will be sold using the asset approach.
The corporate tax rate is 13% for active business income, and 50 2/3% on specified investment business income.
Required:
Determine the total value of the sale of Alpine Inc.

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Definitions:

Vice-Admiralty Courts

Courts established in British colonies to handle maritime cases without a jury, often used for enforcing trade regulations.

Tuscarora Wars

a series of conflicts fought in North Carolina from 1711 to 1715 between the Tuscarora Native American tribe and European settlers, leading to the tribe's move north to join the Iroquois Confederacy.

Yamasee Wars

A series of conflicts from 1715 to 1717 in the colonial American Southeast between English settlers and various Native American tribes, including the Yamasee, which significantly impacted colonial and Native American relations.

South Carolina

A state in the southeastern United States, known for its historical significance in the American Civil War.