You own a wholesale plumbing supply store. The store currently generates revenues of $ $1\mathrm{.}02$ million per year. Next$$ year, revenues will either decrease by $9\mathrm{.}5\%$ or increase by $5\mathrm{.}5\%,$ with equal$$ probability, and then stay at that level as long as you operate the store. You own the store outright. Other costs run $$890,000$ per year. There are no costs to shutting$$ down; in that case you can always sell the store for $$480,000.$ What is the business worth today if the cost of capital is fixed at$10\mathrm{.}4\%?($Hint: Make sure to round all intermediate calculations to at least four decimal places.$)$

Part $1$

What is the business worth today if the cost of capital is fixed at $10\mathrm{.}4\%?$