At the Time of Elijah's Death, He Owned Stock in Grey

question 39

Essay

At the time of Elijah's death, he owned stock in Grey Corporation. The stock is traded on a local exchange with the most recent selling prices as follows.
Per Share
Price
Four trading days prior to Elijah's death $120
Six trading days after Elijah's death 100
Presuming no alternate valuation date election, Elijah's gross estate should include a per share value of:
a. $108.
b. $110.
c. $112.
d. $120.

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Definitions:

Capital Budgeting

The process used by businesses to evaluate and prioritize investments in long-term assets and projects based on their potential returns.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

IRR

Stands for Internal Rate of Return, a financial metric used to evaluate the profitability of potential investments.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of maximizing owner wealth.