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Jeannie Purchased 1,000 Shares in Course Developers for $10,000 on August

question 47

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Jeannie purchased 1,000 shares in Course Developers for $10,000 on August 11,2015.The company went bankrupt on May 11,2016 with no hope of recovery for the shareholders.On what date is the stock deemed to be worthless and what is the nature of the loss?


Definitions:

Annual After-Tax Cash Flow

The amount of money a company has left after paying all its taxes and accounting for all its expenses and income over a year.

Depreciation

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

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Net Present Value

The calculation of the present value of an investment's expected cash inflows minus the initial investment cost, used to analyze the profitability of a project.

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