In 1922, two brothers from Toronto, John W. Billes and Alfred J. Billes, with combined...
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Accounting
In 1922, two brothers from Toronto, John W. Billes and Alfred J. Billes, with combined savings of $1,800, bought
the Hamilton Tire and Garage Limited at the corner of Gerrard and Hamilton streets in Toronto. In 1923, this
company was sold and the brothers set up a new company under the name Canadian Tire Corp. at the corner of
Yonge and Isabella streets. Canadian Tire is now one of Canadas top 60 publicly traded companies and is listed
on the Toronto Stock Exchange. The market capitalization of Canadian Tire in October 2017 was $10.9 billion.
Assuming that the owners were still alive and sold the company in 2017 for $10.9 billion, is giving up $1,800
today in exchange for getting $10.9 billion in 95 years a good deal? On the plus side, the owners got back
around three million times the money they had invested. That probably sounds excellent, but on the down side,
they had to wait 95 long years to get it. What you need to know is how to analyze this trade-off, and this chapter
gives you the tools you need.
Review the opening case in Chapter 5 regarding Canadian Tire and the Billies brothers. Discuss the basic time value of money principles of present value and discounted cash flow in relation to Canadian Tire experience.
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