Pirate CoIs for Sale

question 7

Multiple Choice

Pirate Co.is for sale.The company has recognized $50,000 in profits every year since it began three years ago.The industry has a capitalization rate of 25%.What is the value of Pirate?

• A)$50,000
• B)$150,000
• C)$200,000
• D)$600,000

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Definitions:

Equipment Rental

The process of leasing machinery or equipment for a specific period instead of purchasing it outright.

Markup Per Unit

The sum added to the purchase price of products to account for operational costs and earnings.

Variable Cost

Expenses that change in proportion to the activity of a business.

Desired Profit

The target profit a company sets to achieve in a specific period.