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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 $1,160,000 that is currently appraised at $1,360,000. The equipment originally cost $640,000 and is currently valued at $387,000. The inventory is valued on the balance sheet at $330,000 but has a market value of only one-half of that amount. The owner expects to collect 97 percent of the $185,200 in accounts receivable. The firm has $11,500 in cash and owes a total of $1,360,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?

Respuesta :

Tundexi

Answer:

Market Value = $743,144

Explanation:

Market Value of firm = The Market value of assets - Market value of liabilities

Particulars                         Cost            Market value

Assets

Building                          $1,160,000       $1,360,000

Equipment                      $640,000        $387,000

Inventory                         $330,000        $165,000

Cash                                $185,000         $179,644

Account receivables      $11,500             $11,500

Total Assets                                              $2,103,144

Debt                               ($1,360,000)     ($1,360,000)

Market Value                                             $743,144

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