In each of the following scenarios, indicate why Adobe Corporations accumulation of earnings might be unreasonable relative

Question:

In each of the following scenarios, indicate why Adobe Corporation’s accumulation of earnings might be unreasonable relative to its business needs. Provide one or more arguments the might put forth to support its position that the accumulation is reasonable. Assume that Tess owns all the Adobe stock.
a. Ten years ago, Adobe established a sinking fund to retire its ten-year notes and has added cash to the fund annually. Six months ago, the decided to refinance the notes at at a lower interest rate through the issuance of a new series of bonds sold to an insurance company. The sinking fund balance is invested in and commercial paper. A general plan exists to use the balance to purchase operating assets. No definite plans have been established by year-end.
b. Adobe regularly lends money to Tess at a rate slightly below the rate charged by a commercial bank. Tess has repaid about 20% of these loans. The current balance on the loans is $500,000, which approximates one year’s net income for Adobe.
c. Adobe has heavily invested in and bonds. The current market value of its investments is $2 million. The investment comprises approximately one-half of Adobe’s assets.
d. Tess owns three other corporations, which, together with Adobe, form a brother-sister controlled group. Adobe regularly lends funds to Tess’s three other corporations. Current loans amount to $500,000. The interest rate charged approximates the commercial rate for similar loans. Stocks
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