Assume the K Mart Corporation has stores that have the following facts:

Annual revenues $$500,000,000$

Annual incomes $30,000,000$

Annual gross margins $140,000,000$

Annual cash flows from operations $100,000,000$

All the above flows are perpetuities.

The firm uses a $0\mathrm{.}10$ discount rate for this type of operation. It is agreed that all or none of the stores should be closed.

Additional facts are:

Book value of stores $($and inventory$)$ $$1,400,000,000$

Cash flow of sale or closing of stores $$400,000,000.$

Question:

Should K Mart close the stores? Explain briefly.