Reference no: EM132542082
You are the controller of a chain of? dry-cleaning establishments. You are computing the return on investment for each outlet. Outlet? A, located in a city? core, reported a net profit of $140,000. The land on which Outlet A is located was essentially rural when it was purchased for $95,000. Since? then, the city has? expanded, and the land is now located in the population center. Comparable undeveloped land in the immediate area of the outlet is worth $1,900,000. The net book value of the outlet building and equipment is $410,000. The replacement cost of the building and equipment is $1,100,000. If the outlet? building, equipment, and land were sold as a going? concern, the sale price would be $1,500,000. It would cost $300,000 to demolish the building and clear the property for commercial development.
Requirements
Question ?(a) What is the return on this? investment?
?Question (b) How would you decide whether this outlet should continue to be? operated, sold as a going? concern, or demolished and the land? sold?