You own a wholesale plumbing supply store. The store currently generates revenues of $1.03 million per year. Next? year, revenues will either decrease by 10.5% 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 $880,000 per year. There are no costs to shutting? down; in that case you can always sell the store for $490,000.
What is the business worth today if the cost of capital is fixed at 10.4%? ?(?Hint: Make sure to round all intermediate calculations to at least four decimal? places.)