A and B, Who Are Married and File a Joint

question 61

Multiple Choice

A and B, who are married and file a joint return, have AGI for the current year of $42,000.In addition, they received tax-exempt interest income of $6,000 and Social Security benefits of $15,000.The Social Security benefits to be included in A and B's gross income for the current year is

• A)$0
• B)$7,500
• C)$12,750
• D)$11,750

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Definitions:

WACC

Weighted Average Cost of Capital, a measure used to estimate the average rate a company pays to finance its assets, factoring in both debt and equity.

DCF Approach

The Discounted Cash Flow (DCF) approach is a valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk of investing in the company's stock.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.