Henrietta and Hollis Have Been Married for 10 Years When

question 29

Multiple Choice

Henrietta and Hollis have been married for 10 years when Hollis dies in a sky-diving accident.Their assets are summarized below. Henrietta and Hollis reside in Wisconsin, a community property state.All of the assets were acquired with community funds and pass to Henrietta.Her basis for each of the assets becomes:
Car House Cash from life insurance proceeds

• A)$20,000 $150,000 $ 10,000
• B)$17,500 $175,000 $ 10,000
• C)$17,500 $175,000 $100,000
• D)$15,000 $200,000 $100,000
• E)None of the above.

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Definitions:

Cost of Equity

The return that investors expect for investing in a company's equity, considering the risk of the investment.

Retained Earnings

The portion of a company's profits that is kept or retained for reinvestment in the business, rather than being paid out as dividends.

Retained Earnings

Portion of a company's profits that is kept or retained within the company, rather than paid out to shareholders as dividends, for reinvestment in the business or to pay off debt.

Opportunity Cost Principle

The opportunity cost principle denotes the value of the best alternative foregone when a decision is made to pursue a particular action.