Chapter 1 The Corporation Chapter Outline 1.1 The Four Types of Firms 1.2 Ownership Versus Control of Corporations 1.3 The Stock Market Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-2 Learning Objectives 1. List and define the four major types of firms in the U.S.; describe major characteristics of each type‚ including the means for distributing income to owners. 2. Distinguish between limited and unlimited liability‚ and list firm types that are subject
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B6301: Corporate Finance Clarkson Lumber C C Co. Valuation Clarkson Valuation Navin Chopra 1 Clarkson‚ 1996 • At the beginning of 1996‚ company is entirely owned by Mr. Clarkson • Following tight funding during a period of good business performance‚ the company has obtained debt funding to payoff the trade credit‚ NP trade • While financials for the first quarter of 1996 are available‚ we will value the company as at the beginning of 1996/end of 1995 Clarkson Valuation
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Lecture 1: The advantages of forming a corporation are: * Reduction of personal liability. A sole proprietor has unlimited liability * Taxes. Forming a corporation may mean that more expenses can be considered business expenses and be deducted from the company’s income. * Improved credibility. The business may have increased credibility in the business world compared to a sole proprietorship. * Ability to attract investment. Corporations can raise capital through the sale of equity
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Chapter 2—Social Responsibility MULTIPLE CHOICE 1. Stakeholders’ power over businesses stems from their a. ability to withdraw or withhold resources. b. ability to generate profits. c. media impact. d. political influence. e. stock ownership. ANS: A PTS: 1 2. Those who have a claim in some aspect of a firm’s products‚ operations‚ markets‚ industry‚ and outcomes are known as a. shareholders. b. stockholders. c. stakeholders. d. claimholders. e. special-interest
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True / False Questions 1. The liability of sole proprietors is limited to the amount of their investment in the company. FALSE AACSB: Communication Abilities Bloom’s: Knowledge Difficulty: Easy Learning Objective: 1-3 2. General partners have limited personal liability for business debts in a limited partnership. FALSE AACSB: Communication Abilities Bloom’s: Knowledge Difficulty: Medium Learning Objective: 1-3 3. The separation of ownership and management is one
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Chapter 06 Discounted Cash Flow Valuation Multiple Choice Questions 1. An ordinary annuity is best defined by which one of the following? A. increasing payments paid for a definitive period of time B. increasing payments paid forever C. equal payments paid at regular intervals over a stated time period D. equal payments paid at regular intervals of time on an ongoing basis E. unequal payments that occur at set intervals for a limited period of time 2. Which one of the following
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Assignment Print View 1 of 334 http://ezto.mhecloud.mcgraw-hill.com/hm.tpx For more Ebook’s - Test Bank - Solution Manual Please visit our website : http://www.needbook1.com/ or contact us at Ebooksmtb@hotmail.com Also you can contact us on Skype: Ebooksmtb award: 1.00 point TB 01-01 Which of the following best describes the main rea... Which of the following best describes the main reason that independent auditors report on a company’s financial statements? Management fraud may exist within
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Chapter 16 Test Bank Multiple Choice 1. The Renaissance was born in which of the following cities? a. Athens b. Rome c. Florence d. Pisa Answer: c 2. Cultural and political leadership for the early Renaissance was under the auspices of which of the following families? a. the Lombards b. the Medici c. the Visconti d. the Castiglione Answer: b 3. Which of the following events caused a climate of intellectual skepticism in middle-class men and women of the era? a. the Black
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ACCG927 CURRENT ISSUES IN ACCOUNTING & Corporate Governance Week 1 Introduction and Overview of Accounting Theories 1 Introduction • • • • • • • • • • About the unit Teaching and learning strategy Assessments In-class essays Essay writing workshop Research essay Turnitin requirements Oral team presentation Required readings Importance of written answers each week 2 The Nature of Accounting & Corporate Governance Theory • What is a theory? Kerlinger‚ 1964: "A set of interrelated
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the expected return on debt is 6% with market value weight of 1/3. Therefore the firm’s pre-transaction WACC is 12% WACC (pre-transaction) = 2/3 * 15% + 1/3 * 6% = 10% + 2% = 12% a) (4 points) After the transaction GP will be all equity financed. The firm’s cost of equity the equals the WACC. As there are no taxes the firm’s WACC is independent of its capital structure and remains at 12%. WACC (post-transaction) = 12% = rE‚U * 1/1 => rE‚U = 12% b) (4 Points) In this case the debt-to-value ratio
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