DETAILED 2025 BUSI 452 Assignment 2 QUESTION AND CORRECT WORKINGS

BUSI 452 Assignment 2

Steve Paik
Student No. 4100249



1. (a) Net Asset Value of Realty Inc.
Shareholders’ equity at December 31, 20X6 $14,500,000.00
Add: Excess of Market Value over Book Value on Realty Properties
Co-Owned =($14,000,000+$22,000,000)*40% $14,400,000.00
Wholly-Owned $30,000,000.00
$44,400,000.00
(-) Book Value -$20,000,000.00
$24,400,000.00
Market Value (Cash & Short Term Deposits) $5,000,000.00
(-) Book Value (Balance of Sale Receivable) -$8,500,000.00
-$3,500,000.00
(-) Operating Losses -$4,700,000.00
(-) Income Taxes -$584,000.00
Net Asset Value $30,116,000.00


[Workings]
1.1 Present Value of Losses:
PV = $2.5'M + $1.5'M * (1+0.1)^(-1) + $1'M * (1+0.1)^(-2)
= $4,690,082
= $4.7'M (Rounded)




(b) Liquidation Calculation
Shareholders’ equity at December 31, 20X6 $14,500,000.00
Add: Excess of Market Value over Book Value on Realty Properties
Co-Owned =($14,000,000+$22,000,000)*40% $14,400,000.00
Wholly-Owned $30,000,000.00
$44,400,000.00
(-) Book Value -$20,000,000.00
$24,400,000.00
Less: Excess of Book Value over Market Value on Balance of Sale Receivable
Market Value (Cash & Short Term Deposits) $5,000,000.00
(-) Book Value (Balance of Sale Receivable) -$8,500,000.00
-$3,500,000.00
(-) Liquidation Costs (per Q) -$2,000,000.00
(-) Income Taxes (per Q) -$3,465,000.00
Net Asset Value $29,935,000.00




2. (a) Expected Cash Flows
Net Income (After Taxes) $150,000.00
(+):
Depreciation (Per Q) =($14,000,000+$22,000,000)*40% $35,000.00
Income Taxes (Per Q) $22,000.00
Celebration (Per Q) $1,000.00
Bad Debt (Per Q) $2,000.00
Interest (Per Q) $1,000.00
Property Tax (Per Q) $3,000.00
(-):
Rental Expense -$14,000.00
$50,000.00
Expected Cashflow (After Adjustments) $200,000.00



Steve Paik // Student No. 4100249
This study source was downloaded by 100000899242566 from CourseHero.com on 06-08-2025 06:05:34 GMT -05:00


https://www.coursehero.com/file/208157267/Busi-452-Assignment-2-Paik-4100249pdf/