Question

You own a wholesale plumbing supply store. The store currently generates revenues of $ 1.04 million per year. Next​ year, revenues will either decrease by 9.7 % or increase by 5.3 %​, 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 comma 000 per year. There are no costs to shutting​ down; in that case you can always sell the store for $ 540 comma 000. What is the business worth today if the cost of capital is fixed at 10.2 % question mark  ​(​Hint: Make sure to round all intermediate calculations to at least four decimal places.​)​

Answer 1