Ajak Corporation owns 85% of the single class of Utech Corporation stock. Utech Corporation owns 35% of Tech Corporation. Ajak Corporation also owns 50% of Tech Corporation, and Tech Corporation owns 75% of Baxter Corporation.

Question

Quizplus · Accepted Answer

Ajak Corporation owns 85% of Utech Corporation, which owns 35% of Tech Corporation. Therefore, Ajak Corporation indirectly owns 85% x 35% = 29.75% of Tech Corporation. Additionally, Ajak Corporation owns 50% of Tech Corporation directly. Therefore, Ajak Corporation owns a total of 79.75% of Tech Corporation. Since Tech Corporation owns 75% of Baxter Corporation, this means that Ajak Corporation indirectly owns 59.8125% (79.75% x 75%) of Baxter Corporation. This meets the affiliated group ownership threshold of 50%. The only corporations directly owned by Ajak Corporation are Utech and Tech, so the affiliated group consists of Ajak, Tech, and Utech Corporations. Therefore, choice C is the correct answer.

Ajak Corporation Owns 85% of the Single Class of Utech