Practice Problem 1 You have just compiled the following information for Questex Ltd. $400,000 to $425,000 $120,000 25% Maintainable EBITDA: Annual sustaining capital reinvestment (20% CCA rate) Applicable corporate income tax rate: UCC balances on the valuation date: Equipment (class 8 - 20% CCA rate): Building (class 1 - 4% CCA rate): Original cost of building: Original cost of land: FMV of interest-bearing debt: Excess cash: Real WACC: $350,000 $400,000 $500,000 $300,000 $600,000 $100,000 15% Other information: Even though the land and building are used in Questex's operations, you have decided to treat them as redundant assets because of the different risk levels associated with owning real property as opposed to operating a business. An appraisal of the real estate indicates that the fair market value of the land and building are $475,000 and $600,000, respectively. Market rent for the building is $80,000 per year. You should assume a commission of 5% on the notional sale of the real estate. Any disposition costs, including incomes taxes, arising from the notional disposition should be discounted by 50%. Assume that the accelerated investment incentive applies. Required: Compute the fair market value of Questex Ltd's common shares