Question

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 $1,240,000 that is currently appraised at $1,440,000. The equipment originally cost $720,000 and is currently valued at $467,000. The inventory is valued on the balance sheet at $410,000 but has a market value of only one-half of that amount. The owner expects to collect 98 percent of the $225,200 in accounts receivable. The firm has $10,500 in cash and owes a total of $1,440,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?

Answer 1

Net market value of firm = $903,196

Step-by-step explanation:

Items to determine the Market value of the firm are as below

Item Amount

Current value of building $1,440,000

Current value of equipment $467,000

Market value of inventory $205,000

Cash in hand $10,500

98% of debtors $220,696

Less: Owings -$1,440,000

Net market value of firm $903,196