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 $1,290,000 that is currently appraised at $1,490,000. The equipment originally cost $770,000 and is currently valued at $517,000. The inventory is valued on the balance sheet at $460,000 but has a market value of only one-half of that 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 firm?

Answer 1

Answer: $1,005,698

Step-by-step explanation:

The following can be gotten from the question:

Building = $1490000

Add: Equipment= $517000

Add: Inventory:

= [$460000 × 1/2]

= $230000

Add: Accounts receivable:

= $250200 × 0.99

= $247698

Add: Cash = $11000

Less : liabilities = $1490000

Market value = $1,005,698

Therefore, the market value of the firm is $1,005,698.