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nalin [4]
3 years ago
6

Emily, age 58, has been a participant in the Icon, Inc. ESOP for fifteen years. She plans to retire at 65. At the end of this ye

ar, Emily’s entire account balance is comprised of Icon stock valued at $1,000,000. Emily believes that Icon has a bumpy future ahead and would like to diversify some of her ESOP investments. (She has not diversified any interest in ICON prior to this time.) How much must Icon allow Emily to diversify this year?
Business
1 answer:
Andrej [43]3 years ago
7 0

Answer:

How much must Icon allow Emily to diversify this year?

The answer is $250,000

Explanation:

  • After attaining the age of 55 years and participating already for ten years in the ESOP.
  • Emily will be allowed to diversify the value equal to 25% of investments.
  • 50% of the investment is allowed to be diversified if it is final year of participation but in the present case it is not the final year before the retirement of the Emily so she will not be allowed 50% diversification and only up to 25% is allowed on which the percentage of investment already diversified in previous years will also be reduced.
  • Since here in the past no amount has been diversified by Emily so she will be allowed 25 % of investment to diversify in the current year which comes to $250,000 ($1,000,000* 25%). Thus the answer is $250,000.
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