Jake owns The Corner Market which he is trying to sell so that he can retire and

Question

Jake owns The Corner Market which he is trying to sell so that he can retire and travel. The Corner Market owns the building in which it is located. This building was built at a cost of $1,200,000 and is currently appraised at $1,470,000. The counters and fixtures originally cost $718,000 and are currently valued at $420,000. The inventory is valued on the balance sheet at $358,000 and has a retail market value equal to 1.2 times its cost. Jake expects the store to collect 92 percent of the $198,700 in accounts receivable. The firm has $10,600 in cash and has total debt of $1,490,000. What is the market value of this firm?

Explanation / Answer

Value of firm = 1023004

Calculation of value of firm Particulars Book Value Market Value Building Value 1200000 1470000 Counters and fixtures 718000 420000 Inventory 358000 429600 Accounts Receivable 198700 182804 Cash 10600 10600 Less: Total Debt 1490000 1490000 Total 995300 1023004

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