Tin Corporation Was Created 10 Years Ago

question 98

Essay

Tin Corporation was created 10 years ago.It currently is valued at $1.5 million as follows: Tacks division ($420,000),Safety Pins division ($580,000),Paper Clips division ($450,000)and investment assets ($50,000).Tin currently has three shareholders: Antonio,who was the initial shareholder and now owns 40% of the stock (basis in stock $350,000),and Beth and Chang,who each purchased 30% of Tin two years ago for $435,000.
Tin is having management problems because the shareholders cannot agree on the future of the company.They have determined that it would be best to divide up the company and go their separate ways.Each shareholder feels that the others do not deserve to continue using the Tin Corporation name.

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Definitions:

Expected Rate

The anticipated return on an investment over a specific period.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of numerical data from its mean.

Zero Standard Deviation

A statistical measure indicating that all values within a data set are identical.

Risk-Free Asset

A financial instrument that is considered to have no risk of financial loss, typically government bonds.