XYZ Ltd owns a land-based drilling rig. It is in near perfect condition and unmodified. The company wishes to establish a fair value for the rig and identified two markets where near identical rigs are being actively traded. In Market A, the price that would be received is $27 000, there will be a commission payable to a selling agent of 10% and it will cost $3,000 to transport the rig to that market. In Market B, the price that would be received is $26 000, there are no commissions to pay and the costs to transport the asset to that market are $3000. What fair value would be placed on the asset based on this information? Show workings and explain.

Answer rating: 100% (QA)

ANSWER To assess whether Bob has invested enough of his own money and whether he wisely spent the initial 50000 lets analyze the financial situation o... View the full answer