Question
You own a wholesale plumbing supply store. The store currently generates revenues of $ 1.00 $1.00 million per year. Next year, revenues will either decrease
You own a wholesale plumbing supply store. The store currently generates revenues of $ 1.00 $1.00 million per year. Next year, revenues will either decrease by 10.0 % 10.0% or increase by 5.0 % 5.0%, with equal probability, and then stay at that level as long as you operate the store. You own the store outright. Other costs run $ 900 comma 000 $900,000 per year. There are no costs to shutting down; in that case you can always sell the store for $ 500 comma 000 $500,000. What is the business worth today if the cost of capital is fixed at 10.0 % question mark 10.0%?(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 10.0 % question mark 10.0%? Today the business is worth $ nothing . (Round to the nearest dollar.)
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