Fran is considering permanently closing down her beauty salon. A consultant advises her that if she stays open for business, she will have operating revenues of $300,000 and operating costs of $280,000. In addition, Fran has paid $40,000 for fixtures that can be resold for $15,000 after she closes the beauty salon. The value of Fran's beauty salon, if it remains open, is $____.

Question

Quizplus · Accepted Answer

The value of Fran's beauty salon if it remains open is calculated by subtracting the operating costs from the operating revenues, which is $300,000 - $280,000 = $20,000. The fixtures' resale value or the cost of the fixtures is not considered in this calculation since it's about the salon's value from operations, not asset liquidation.

Fran Is Considering Permanently Closing Down Her Beauty Salon