The Food Hut Inc. is for sale, and the sole shareholder, Andy, is trying to determine the value of the company. The business has annual pre-tax financial profits of $55,000. The following items will be omitted in arriving at the business value as they will not pertain to the prospective buyer's objectives: donations of $2,000, personal travel of $1,500, and part-time wages to Andy's son, Phil, of $8,000.
The store is run from a small building which has a fair market value of $105,000 (land = $45,000 and building = $60,000). The property was originally purchased for $75,000 (land = $40,000 and building = $35,000). The UCC on the building is $20,000. There is no mortgage remaining on the property.
Businesses similar to The Food Hut Inc. are generating a 15% rate of return.
Andy is selling the operations of the business using the earnings method, and the small store and land will be sold using the asset approach.
The corporate tax rate is 13% for active business income, and 50 2/3% on specified investment business income.
Required:
Calculate the total value of the sale of The Food Hut Inc. Show all calculations.

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