You own a wholesale plumbing supply store. The store currently generates revenues of

$ 1.02$1.02

million per year. Next year, revenues will either decrease by

10.1 %10.1%

or increase by

5.4 %5.4%,

with equal probability, and then stay at that level as long as you operate the store. You own the store outright. Other costs run

$ 880 comma 000$880,000

per year. There are no costs to shutting down; in that case you can always sell the store for

$ 470 comma 000$470,000.

What is the business worth today if the cost of capital is fixed at

10.4 % question mark10.4%?

(Hint:

Make sure to round all intermediate calculations to at least four decimal

places.)