Question

MC algo 2-2 Market Values Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1290,000 that is currently appraised at 51,490,000. The equipment original cost $770,000 and is currently valued at $517000 The inventory is valued on the balance sheet at $460.000 but has a market value of only one half of the amount. The owner expects to collect 99 percent of the $250.200 in accounts receivable. The firm has $11,000 in cash and owes a total of $1,490,000. The legal problems are personal and unrelated to the actual business. What is the market value of this fim? Multiple Choice 0 o $1.005.699 0 0 $4235,695 0 0 $747000 0 C) $1485 898

Answer 1

Answer :- Calculation of Market Value of the firm :-

Market Value = Current Value of Building + Current value of equipment + Market value of inventory + Accounts receivable + Cash - owing balance

Market Value = $1,490,000 + $517,000 + $230,000 ( $460,000/2) + $247,698 ( $250,200 *99%) + $11,000 - $1,490,000

Market Value = $1,005,698

So the correct answer is option A. ( $1,005,698)

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