The Assets in Hong's Estate,including the Value of His Home

question 19

Multiple Choice

The assets in Hong's estate,including the value of his home on Elm Street and its contents,are insufficient to pay in full all of the gifts provided for in his will.His heirs will receive

• A)full payment in order of seniority until the assets are exhausted.
• B)nothing-the assets will descend to the state.
• C)reduced benefits.
• D)the option of distributing the assets according to their wishes.

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Definitions:

Incremental After-Tax Net Cash Flows

The additional cash flows a business expects to generate after accounting for taxes, resulting from a new project or investment.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Net Investment

The total amount spent on acquiring, maintaining, and improving fixed assets, minus depreciation.