Week 3, Semester 1, 2012
(Commencing Monday 12 March)
Acknowledgement: These Tutorial Questions were originally devised by Martin Markovic, Senior Lecturer, Business School, University of Adelaide.
A, B and C are long time friends from University days. They share common interests especially with respect to making money. A is a computer programmer for a bank, B is a chartered accountant and C a corporate lawyer. While having drinks after work one evening in May, A indicated that he had become disenchanted with the lack of challenge at his work. He is contemplating undertaking a radical change in direction in his career. He stated that he wants to take the plunge and set up a business but hasn’t come across the right opportunity. This entrepreneurial spirit excited B’s and C’s capitalistic notions. They discussed various business opportunities. At a subsequent meeting in June, A is besotted about an exciting new range of specialist computer products which cater only for accounting and legal firms. A informs B and C that this new range of products was recently released in the United States by a large computer manufacturer, D. It had taken the market by storm. D had just opened an Australian office in Sydney and A had befriended the Australian manager of D at a computing conference. The manager of D indicated that D was anxious to establish itself quickly in the Australian market. A was delirious. To get the exclusive South Australian distribution rights for these products was the business opportunity of a lifetime. However, he lacked the required finances. B and C’s greed for money soon had the three friends entering the following syndicate agreement:
(i)B and C would each provide $200,000 into the syndicate;
(ii)A would operate the day-to-day...