What is the business worth today

Assignment Help Financial Management
Reference no: EM131973706

You own a wholesale plumbing supply store. The store currently generates revenues of $1.03 million per year. Next? year, revenues will either decrease by 10.2% or increase by 4.7 %?, with equal? probability, and then stay at that level as long as you operate the store. You own the store outright. Other costs run $890,000 per year. There are no costs to shutting? down; in that case you can always sell the store for $410,000. What is the business worth today if the cost of capital is fixed at 10.4 %? ?(?Hint: Make sure to round all intermediate calculations to at least four decimal places.?)? What is the business worth today if the cost of capital is fixed at 10.4%?

Reference no: EM131973706

Questions Cloud

Describe two types of cooperative programs : Identify and describe two types of cooperative programs available through the Occupational Safety and Health Administration.Why are these alliances important?
What is the indirect utility function : What is the indirect utility function if prices of x and y and income are denoted by px, py and M respectively
Calculate the npv of continuing to operate the mine : Calculate the NPV of continuing to operate the mine if the cost of capital is fixed at 15.3%. Is it optimal to abandon the mine or keep it? operating?
Determining the value in an organization : "What might the reasons be for accounting seeming to have less value in an organization?
What is the business worth today : You own a wholesale plumbing supply store. What is the business worth today if the cost of capital is fixed at 10.4
Accurate statement about coordination : Which of the following is not an accurate statement about coordination?
The capm to estimate the market risk premium : Use the unlevered beta and the cost of the unlevered equity (asset return) and the CAPM to estimate the market risk premium.
Process for creating a benefits packet for employees : What is the process for creating a benefits packet for employees?
Social media and other advanced technologies : How is Microsoft using social media and other "advanced technologies" to deliver new products, solution, or service to their clients?

Reviews

Write a Review

Financial Management Questions & Answers

  Cost of debt for tax benefit associated with deductibility

A for-profit firm must adjust the cost of debt for the tax benefit associated with its deductibility (multiply by 1-T). A not-for-profit firm also needs to adjust the debt to an after-tax basis even though it does not pay taxes (by using the tax rate..

  What is this security equivalent pre-tax yield

A bank is considering an investment in a municipal security that offers a yield of 8 percent. What is this security’s equivalent pre-tax yield.

  Contract formed for bonus compensation system

Discuss whether there was a contract formed for the bonus compensation system. Are you able to classify the type of contract?

  Deposited into this guaranteed account to fully fund request

how much money should be deposited into this guaranteed account to fully fund this request?

  Average net income to the average investment

The profitability index of an investment project is the ratio of the: net present value of every project cash flow to the initial cost. present value of the Time 1 and subsequent cash flows to the initial cost. internal rate of return to the current ..

  Capital expenditure that requires an initial investment

Jordan Enterprises is considering a capital expenditure that requires an initial investment of $30,000 and returns after-tax cash inflows of $ 4857 per year for 10 years. The firm has a maximum acceptable payback period of 8 years. Determine the payb..

  Mutually exclusive-required projects with the cash flows

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 10 percent. Project A s Cash flow from year 0 to year 3: -1000, 400, 40..

  Contradictions in surface structure-deep structure of power

Membership negotiation is only relevant when a newcomer joins an organization. Scholars taking a traditional approach to power believe that there are inherent contradictions between the "surface structure" of power and the "deep structure" of power?...

  Prepare memo for boss summarizing vision points services

Your boss has heard of a new company called Vision Point that offers a complete accountsreceivable system for interested firms. Visit their Web site and then prepare a 1-page memo for your boss summarizing Vision Point's services.

  Analyst will make regarding the investment opportunity

An analyst evaluting the North facility expects that the project will be financed by debt that costs the firm 7%. What recommendation do you think this analyst will make regarding the investment opportunity? Another analyst assigned to study the Sout..

  Which of the best describes a fiduciary call

Which of the following best describes a fiduciary call? A long. Which of the following parties would most likely take a long position in an interest rate floor?

  Die machines to produce equipment for other firms

Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The initial cost of one customized tool and die machine is $850,000. This machine costs $10,000 a year to operate. Each machine has a life of 3 years before it is repl..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd