Finance :You own a wholesale plumbing supply store
You own a wholesale plumbing supply store
Subject: Business / Finance
Question
You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per year. Next year, revenues will either decrease by 9.8% or increase by 4.9%, 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 $340,000. What is the business worth today if the cost of capital is fixed at 10.2%?
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