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You own a wholesale plumbing supply store. The store currently generates revenues of $1.02 million per year. Next year, revenues will either decrease by 9.7%
You own a wholesale plumbing supply store. The store currently generates revenues of $1.02 million per year. Next year, revenues will either decrease by 9.7% or increase by 4.7%, with equal probability and then stay at that level as long as you operate the store.
You own the store outright. Other costs run $890,000 per year. There are no costs of shutting down, in that case, you can always sell the store for $520,000. What is the business worth today if the cost of capital is fixed at 9.9%?
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