Mayfield Real Estate Development is a company that owns and operates a number of real estate ventures. The
company also engages in real estate acquisitions and sales of properties, some of which are properties the
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company no longer wishes to operate. Similar real estate firms earn a 15-percent rate of return. Mayfield
reported the following earnings over the last five years:
ear Operating Income Gain(Loss) on Sale of Assets Net Income
1 $1,000,000 $700,000 $1,700,000
2 $1,500,000 $600,000 $2,100,000
3 $1,100,000 $400,000 $1,500,000
4 $1,600,000 (200,000) $1,400,000
5 $1,800,000 (400,000) $1,400,00
• Prepare a business valuation report for Mayfield Real Estate Development.
• Provide analysis for giving equal weights to the five years of earning data versus giving greater weight to the
more recent earning periods (where five is more recent).
• Given the type of industry Mayfield Real Estate Development is in, do you believe 5 years of financial
information is sufficient to provide an accurate picture?