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Day-Brite, Inc currently pays a $2.75 dividend and its current stock price is $27.80. Assuming the company’s cost of equity capital is 5% use the dividend discount valuation model to estimate the company’s growth rate.

Q25. An S-corp distributes appreciated property with FMV $130,000 and basis $70,000. The corporation has no E&P. Focusing only on the gain recognition, how does this gain affect AAA? A. Increase by $60,000 B. Increase by $130,000 C. Decrease by $70,000 D. No effect

The fiscal year-end 2016 financial statements for Walt Disney Co. report revenues of $85,632 million, net operating profit after tax of $12,954 million, net operating assets of $55,603 million. The fiscal year-end 2015 balance sheet reports net operating assets of $57,079 million.         Walt Disney’s 2016 net operating profit margin is:

Q31. In a complete liquidation of an S-corp, a shareholder determines gain or loss by comparing the FMV of property received to which amount? A. Stock basis B. AAA balance C. E&P balance D. Corporate basis

Liabilities are recorded in the balance sheet in what order:

Q15. An S-corp with positive AAA pays $25,000 cash distributions and has sufficient shareholder basis. Which item simultaneously reduces both AAA (to the extent of AAA) and the shareholder’s stock basis? A. Distributions B. Nondeductible penalties C. Tax-exempt income D. Section 179 deduction

Q14. A shareholder has zero stock basis and $9,000 remaining debt basis. The S-corp allocates a $26,000 ordinary loss, and the shareholder is fully at risk. How much of the loss is deductible under basis rules? A. $0 B. $9,000 C. $17,000 D. $26,000

Q23. An S-corp has positive AAA and incurs ordinary losses, nondeductible expenses, and cash distributions. Under AAA rules, which item cannot reduce AAA below zero? A. Nondeductible expenses B. Ordinary losses C. Distributions D. Section 179 deduction

Q13. An S-corp recognizes $40,000 of tax-exempt municipal bond interest and incurs $6,000 of related nondeductible expenses. Which item increases shareholder basis without increasing AAA (tracked instead in the Other Adjustments Account)? A. Gain on appreciated property B. Ordinary income C. Tax-exempt income D. Nondeductible expenses

Prosecutors may dismiss or reduce charges as part of plea negotiations.