Question
In: Finance
3. A business valued at $3,000,000 has 3 partners. Each of the 3 partners buys a...
3. A business valued at $3,000,000 has 3 partners. Each of the 3 partners buys a $500,000 life insurance policy for purposes of a buy/sell agreement on each of the other partners. Which of the following is/are true?
1. This is an example of an entity purchase plan.
2. This is an example of a cross purchase plan.
3. The buy/sell agreement is under-funded.
a. 1 only b. 2 only c. 1 and 3 d. 2 and 3
Solutions
Expert Solution
As per the above information given:
Ans- (b) 2 Only
Reason:- Since the business has 3 partners and by implementing Cross purchase plan strategy the business will become both the owner and beneficiary of the policy.
jeff jeffy answered 2 years agoRelated Solutions
A business valued at $2,000,000 has 4 partners. Each of the 4 partners buys a a...
A business valued at $2,000,000 has 4 partners. Each of the 4
partners buys a a $180,000 life insurance policy for purposes of a
buy-sell agreement on each of the other partners. Which of the
following is/are true?
1. This is an example of an entity purchase plan.
2. This is an example of a cross purchase plan.
3. The buy-sell agreement is over-funded.
Group of answer choices
2 only
1 only
2 and 3 only
1 and 3 only
Problem #3: Company A (100% equity) is valued at $15,000,000 and Company B (which has $3,000,000...
Problem #3: Company A (100% equity) is valued
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with an interest rate of 8%). The tax rate is 30%. Both A & B
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that both have identical operating risk profile and identical
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Value of B
Capital Structure Mix of B
Cost of capital for A & B
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2014, after receiving KJ's assets, what will be her estate tax
liability?
Your company has EPS $3. With 1,000,000 shares outstanding valued at $42 each. Woolworths has an...
Your company has EPS $3. With 1,000,000 shares outstanding
valued at $42 each.
Woolworths has an EPS of $1 with 1,000,000 shares outstanding
valued at $20 each.
You will pay for Woolworths by issuing new shares. There are no
expected synergies from the transaction. Suppose you offer an
exchange ratio such that, at current pre-announcement share
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go...
1. The gross estate of Juanita, decedent, includes stock in Soap Corporation (E&P of $3,000,000) valued...
1. The gross estate of Juanita, decedent, includes stock in Soap
Corporation (E&P of $3,000,000) valued at $2,500,000. At the
time of his death, Juanita owned 60% of the Soap stock outstanding,
and she had an adjusted basis of $420,000 in the stock. The death
taxes and funeral and administrative expenses related to Juanita’s
estate amount to $1,000,000 and the adjusted gross estate is
$7,000,000. The remainder of the Soap stock is owned by Merry,
Juanita’s daughter and sole heir...
Assume that three business owners each own an identical storage building valued at $120,000. Assume that...
Assume that three business owners each own an identical storage
building valued at $120,000.
Assume that there is a 1% chance in any year each building will be
destroyed by a peril (fire), and that a loss to any of the
buildings is an independent event. Assuming that:
(first case ) Fire events are independent of each other
(second case) Each building faces the same types of risks and
environmental conditions.
Given that, solve the below questions for each case:...
Assume that three business owners each own an identical storage building valued at $120,000. Assume that...
Assume that three business owners each own an
identical storage building valued at $120,000.
Assume that there is a 1% chance in any year each
building will be destroyed by a peril (fire), and that a loss to
any of the buildings is an independent event. Assuming that:
(first case ) Fire events are independent of each
other
(second case) Each building faces the same types of
risks and environmental conditions.
Given that, solve the below questions for each
case:...
Mary has standard indifference curves (convex). She always buys 3 pounds of coffee each month. Even...
Mary has standard indifference curves (convex). She always buys
3 pounds of coffee each month. Even when the price of coffee
doubles, Mary buys 3 pounds of coffee.
(a) What is Mary’s price elasticity for coffee?
(b) Plot Mary’s indifference curves. Plot coffee on the
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vertical.
Background Information Recently, there has been talk amongst the partners regarding the expansion of the business into...
Background Information
Recently, there has been talk amongst the partners regarding the
expansion of the business into the home construction
business. Charles, Bob and Jane support the idea but
Mary is
totally opposed. Charles,
Bob and Jane decide to buy out Mary for $25,000. Charles
and Jane are each contributing $10,000 to the buyout and
Bob is contributing $5,000. They intend to
implement their expansion plans by purchasing a tract of
land and building a small subdivision. A
financial analysis has indicated that although such a
project is risky...
In each of the problems below, the ABC partnership has three equal partners A, B and...
In each of the problems below, the ABC partnership has three
equal partners A, B and C and the following balance sheet:
Assets
Partners’ Capital
A.B.
F.M.V.
A.B.
F.M.V.
Cash
$60,000
$60,000
A
$30,000 $45,000
Receivables
0
15,000
B
30,000
45,000
Inventory
15,000
30,000
C
30,000 45,000
Goodwill
15,000
30,000
Total
$90,000
135,000
$90,000 $135,000
Problem
A partner A dies on the first day of the current year and in an
agreement arranged...
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