Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

plz explain as much as you can 2. Kim Seating owns a small convenience store and gas bar. Total average business assets in the most

image text in transcribed

plz explain as much as you can

2. Kim Seating owns a small convenience store and gas bar. Total average business assets in the most recent year amount to $1,500,000. Liabilities total $600,000 and owners' equity total $900,000. The land, on which the business is located, is carried at a historical cost of $150,000. In the past year the business income was $250,000 When it was originally built the business was located in a rural area outside a large city. Since then the city has expanded and the business is surrounded by office and residential towers. Kim was recently offered $3,000,000 for her business. The developer wants to tear down the business and build a large condominium apartment building on the property. Required a) Calculate the ROI for this business. b) Kim expects a minimum return of 12% on this business. Calculate the residual income. Kim's business advisor has argued that ROI should be calculated based on the value of the business. Calculate the ROI for this business assuming that the business is valued at $3,000,000 d) Calculate the residual income if the value of the business is taken as $3,000,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Guide To Hipaa Auditing Practical Tools And Tips To Ensure Compliance

Authors: Margret Amatayakul

1st Edition

1578393582, 978-1578393589

More Books

Students also viewed these Accounting questions

Question

Define fee simple property ownership.

Answered: 1 week ago

Question

b. What groups were most represented? Why do you think this is so?

Answered: 1 week ago