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22 October, 21:29

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 $1,260,000 that is currently appraised at $1,460,000. The equipment originally cost $740,000 and is currently valued at $487,000. The inventory is valued on the balance sheet at $430,000 but has a market value of only one-half of that amount. The owner expects to collect 99 percent of the $235,200 in accounts receivable. The firm has $10,700 in cash and owes a total of $1,460,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm

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  1. 22 October, 21:33
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    Market value of the firm (equity) 1,214,290

    Explanation:

    We have to solve for the market value of both, assets and liabilities:

    Building 1,460,000

    Equipment 487,000

    Inventory 215,000

    Accounts Receivables

    235,200 x. 99 = 232,848‬

    Cash 10,700

    Liabilities (1,460,000)

    Market value 1,214,290
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