Alice, Betty and Carol are equal owners of ABC, Inc. They believe that ABC is worth about $3,000,000 today. They think that the value of ABC will increase by about 5% to 10% per year. Each of them has a basis in their stock of $500,000. ABC is very profitable. Each of them draw an annual salary of $250,000. They agree that if any one of them dies, they do not want anyone else to be the owner of the decedent’s stock. Explain which method you recommend they use and why. ( a stock redemption buy-sell agreement or a cross-purchase buy-sell agreement )

three partners, John, Jim, and Alice form a partnership. John invests $27,500; Jim invests $10,700, and Alice invests $8,400. In addition, Jim performs specific management functions for which he is paid $2,000 from the partnership proceeds. if the partnership earns $176,000, how much will jim receive?

The expenses associated with sending two children through college prevented Victor and Maria Hernandez from adding substantially to their investment program. Now that their younger son, Joseph, has completed school and is working full time. They would like to build up their investments quickly. Victor is 47 years old and wants to retire early, perhaps by age 60. In addition to the retirement program at his place of employment, Victor believes that their investment portfolio, currently valued at $115,000, will need to triple to $345,000 by his planned retirement time, in 13 years. He and Maria realize that they will have to sacrifice a lot of current spending to save and invest for retirement. What rate of return is needed on the $115,000 portfolio to reach their goal of $345,000 (assuming no additional contributions)? Use Appendix A-1 or visit the Garman/Forgue companion website. Round your answer to the nearest whole number. Round ‘Future Value of a Single Amount’ in intermediate…

Velma and Keota (V&K) is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a five-year useful life, will cost $15,169.64, and will generate expected cash inflows of $3,900 per year. The second investment is expected to have a useful life of four years, will cost $10,073.45, and will generate expected cash inflows of $3,600 per year. Assume that V&K has the funds available to accept only one of the opportunities. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the internal rate of return of each investment opportunity. (Do not round intermediate calculations.) b. Based on the internal rates of return, which opportunity should V&K select? Internal Rate of Return % a. First investment % Second investment b. V&K should select the second investment