Question
Use the following information to answer the question below. The Cuisinware Home Appliances INC is at the point where it is considering investing in the
Use the following information to answer the question below.
The Cuisinware Home Appliances INC is at the point where it is considering investing in the assets needed to produce coffee makers. The makers would be produced in a building owned by the firm. The building, which was bought by CHA 20 years ago for $115,000, is currently vacant but it can be sold for $300,000. The value of the building on CHAs books is $8,000. CHA can depreciate this $8,000 over two years on a straight-line basis. In order to estimate the market value of the building at the end of the 10 year project, the company assumes that the price change will follow the trend experienced in the last 20 years. The land on which the building sits was bought for $96,000 twenty years ago and it is valued at $255,000 today. The expected appreciation in the land value is 4.60% per year over the coming ten-year period. CHA assumes that it will be able to sell both the building and the land together at their expected values at the end of the projects life.
1. Calculate the ATSV of each asset separately.
Please show all work so I can understand how you got to the answer. I will give thumbs up, thank you!!
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