If it is assumed that the profit level remains the same, the use of the dividend discount model can be used to assess the firms' value
. If it is assumed that the profit level remains the same, and does not decrease, and an alternate investment over a long period of time will yield 11%, this will give the firm a value of $509,090, this is above the asking price. Therefore, while the firm has a low level of assets, it is generating income. The issue that would hold back a purchase would be the current decline in profit and concern for the reason this is declining and Gino's reason for sale. If there are no other negative factors then $200,000 may be a fair price.
Dividend discount model calculator can be found at http://www.moneychimp.com/articles/valuation/dcf.htm