At the Time of Rick's Death, He Owned 70% of the Stock

question 90

Multiple Choice

At the time of Rick's death, he owned 70% of the stock in Robin Corporation, a closely held family business. Over the past five years, Robin has averaged annual profits of $400,000 in an industry where the usual rate of return is 9%. If the book value of the corporation's assets is $1,000,000 and goodwill exists, what might be a realistic value of the stock in Rick's gross estate?

• A) $2,550,000.
• B) $1,785,000.
• C) $1,550,000.
• D) $310,000.
• E) None of the above.

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Definitions:

Realgar

A red-orange arsenic sulfide mineral, historically used as a pigment and in fireworks.

Formula

A symbolic representation of the composition of a chemical compound, showing the elements present and their relative proportions.

AsS

Arsenic sulfide, a compound of arsenic and sulfur, known for its use in pigments and in various chemical reactions.

Arsenic

A toxic chemical element known by the symbol As, used in various industrial processes but also known for its poisonous properties.