You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...

Question

Question

You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per year. Next year, reven

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

cost of capital (given) = 10.4%

The present worth of the business today = present value of all future benefits (profits).
= Average profit/ cost of capital.
= $114,245/10.4%
=$1,098,509.62

$,010,000 Invease by 4By. deeneaee by97y. 910, 010 1,os8,480 Revenue Costs 8t0000 8t0,000 40,010 /88,480 profa rerege po (o-5

Add a comment

Answer 2

Similar Homework Help Questions

You own a wholesale plumbing supply store. The store currently generates revenues of $1.02 million per...

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...
You own a wholesale plumbing supply store. The store currently generates revenues of $1 million per...

You own a wholesale plumbing supply store. The store currently generates revenues of $1 million per year. Next year (the year to t=1), revenues will either decrease by 10% or increase by 5%, with equal probability, and then stay at that level as long as you operate the store. Other costs run $900,000 per year. Due to an agreement with the trade union, you have to keep this store operating for at least 3 years. Starting from the end of...
You run a perpetual encabulator machine, which generates revenues averaging $25 million per year. Raw material costs are 60% of revenues. These costs are variable−they are always proportional to reven...

You run a perpetual encabulator machine, which generates revenues averaging $25 million per year. Raw material costs are 60% of revenues. These costs are variable−they are always proportional to revenues. There are no other operating costs. The cost of capital is 11%. Your firm’s long-term borrowing rate is 8%. Now you are approached by Studebaker Capital Corp., which proposes a fixed-price contract to supply raw materials at $15 million per year for 10 years. a. What happens to the operating...

You n n a perpetual encabulator machine, which generates evenues averaging $27 million per year. Raw...

You n n a perpetual encabulator machine, which generates evenues averaging $27 million per year. Raw material costs are 60% of revenues. These costs are va able hey are always proportional to revenues. There are no other operating costs. The cost of capital is 12%. Your firms long term borrowing rate is 9% Now you are approached by Studebaker Capital Corp., which proposes a fixed-price contract to supply raw materials at $16.2 million per year for 12 years. a. What...
Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World War II. Before joining the armed forces, he had worked for a locally owned plumbing company and wanted to continue with that type of work once the war effort was over. Shortly after returning to his hometown of Minneapolis, Minnesota, he became aware of an unprecedented construction boom. Returning soldiers needed new housing as they started families and...
Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World War II. Before joining the armed forces, he had worked for a locally owned plumbing company and wanted to continue with that type of work once the war effort was over. Shortly after returning to his hometown of Minneapolis, Minnesota, he became aware of an unprecedented construction boom. Returning soldiers needed new housing as they started families...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World War II. Before joining the armed forces, he had worked for a locally owned plumbing company and wanted to continue with that type of work once the war effort was over. Shortly after returning to his hometown of Minneapolis, Minnesota, he became aware of an unprecedented construction boom. Returning soldiers needed new housing as they started families and...
You own a cab company and are evaluating two options to replace your fleet. Either you...

You own a cab company and are evaluating two options to replace your fleet. Either you can take out a five-year lease on the replacement cabs for $ 495$495 per month per cab, or you can purchase the cabs outright for $ 31 comma 600$31,600, in which case the cabs will last eight years. You must return the cabs to the leasing company at the end of the lease. The leasing company is responsible for all maintenance costs, but if...
Problem: Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under...

Problem: Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under the laws of the State of Illinois, with an authorized capitalization of 10,000 shares of no-par common stock with a stated value of $30 per share. The common stock is sold over the counter in the local area. You have been hired as of Friday, December 26, 2014, to replace the controller, who has resigned. As controller, you are responsible for the corporation’s accounting...

Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World...

Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World War II. Before joining the armed forces, he had worked for a locally owned plumbing company and wanted to continue with that type of work once the war effort was over. Shortly after returning to his hometown of Minneapolis, Minnesota, he became aware of an unprecedented construction boom. Returning soldiers needed new housing as they started families and readjusted to civilian life. Mort felt...

You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...

Homework Answers

Add Answer to:
You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...

Post as a guest

Earn Coins

You own a wholesale plumbing supply store. The store currently generates revenues of $1.02 million per...

You own a wholesale plumbing supply store. The store currently generates revenues of $1 million per...

You run a perpetual encabulator machine, which generates revenues averaging $25 million per year. Raw material costs are 60% of revenues. These costs are variable−they are always proportional to reven...

You n n a perpetual encabulator machine, which generates evenues averaging $27 million per year. Raw...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from...

Moore Plumbing Supply Company Capital Structure Mort Moore founded Moore Plumbing Supply after returning from duty...

You own a cab company and are evaluating two options to replace your fleet. Either you...

Problem: Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under...

Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World...

You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...

Homework Answers

Add Answer to: You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...

Post as a guest

Earn Coins

Add Answer to:
You own a wholesale plumbing supply store. The store currently generates revenues of $1.01 million per...