Chapter 3, Problem 26E

A close friend of your father has a medium-sized firm with about 400 employees. You overheard him mention to your father that he was considering "taking the firm public" in order to access more money for expansion. He suggested your father invest in the company at that time. Since you are a finance major your father asked you later what you thought about the opportunity and exactly what was involved in "taking the firm public." What financial statements would he need to provide to potential investors? Would it be better for him to issue a bond? explains the process involved in "taking a firm public" and issuing common stock that will then be traded on an organized exchange?

You are an investor in a start-up company that has a patent on a new medical device.  It has been approved by the FDA and is now going to marketing.  The venture capital group supporting the venture believe the device will enjoy an excellent market reception, a decent reception, or a very poor reception with probabilities 0.3, 0.5, and 0.2, respectively.  As an investor, you have three options available to you:  (1) you can go with the market ride where the return to you in profit will be $80K, $30K, or -$25K, respectively, for the three possible market receptions.  (2) You can “pool” your investment with others, sharing both the good and the bad outcomes, and your profits would be $60K, $20K, or $0K, respectively.  Finally, (3) you could sell your investment for cash; the current market value of your investment is $30K.  Assume you are an expected return maximizer and ignore the time value of money when answering the following questions.   Which of the three options is the most…

Imagine that you are a financial manager researching investments for your client. Think of a friend or a family member as a client. Define their characteristics and goals such as an employee or employer, relatively young (less than 40 years) or close to retirement, having some savings/property, a risk taker or risk averter, etc. Next, use Nexis Uni at the Strayer University library, located at Nexis Uni, click on “Company Dossier” to research the stock of any U.S. publicly traded company that you may consider as an investment opportunity for your client. Your investment should align with your client’s investment goals. (Note: Please ensure that you are able to find enough information about this company in order to complete this assignment. You will create an appendix, in which you will insert related information.) Provide a rationale for the stock that you selected, indicating the significant economic, financial, and other factors that led you to consider this stock. Suggest the…

Once upon a  time,  there was an amazing group of  students who  studied at Cronfwoman University.   News had spread about how good these students were – both at school work, and at working with each  other.  They chit‐chatted with  their neighbors in class, collaboratively worked with  them and shared  many a smiles with them.  The amazing students were approached by an investor, Ms Finn Ance Major,  who asked for their help.  The investor was contemplating setting up a Sandwich Shop at the University  and wondered if that was a good investment.    What is your recommendation to Ms Finn Ance Major?  Here is some information to get you started:  1. The Sandwich Shop will sell made‐to‐order cold and hot sandwiches, and non‐alcoholic beverages  only  2. The University has an intake of 6,000 students  for  the 3‐year Undergraduate program and 1,000  students for the 2‐year Master’s Program per year  3. There are a 4 other food options on campus  – but none of these offer sandwiches   4.…

Match each business description with the BEST model for fundraising. V A USC focused Matcha Cafe A. Bootstrap V A startup that wants to create NFTS for each cup of B. Venture Capital matcha it sells in the metaverse. C. Bank Loan V A Southern California Matcha Shop that has been in business for 10 years and wants to add another D. Friends and Family. location. a student company looking at creating a new and scalable matcha recipe to boost memory and performance.

Assume that you are the financial manager for Healthy Body Hospital and you have been asked to explain about the cost of capital to a group of non-financial managers who are also employed at this hospital. In advance of your presentation, you have been given the following three questions. Write a paragraph of approximately 100 words in response to each of these questions that will help guide your explanation to the group that you will be addressing. Because you will be speaking to a group of non-financial managers, in your own words, explain what exactly is meant by the term “cost of capital”. Prior to undertaking any capital budget project, is it important for a financial manager to understand the cost of capital? Why or why not?  What are we referring to when we discuss the “optimal capital structure” of a business? Why is the optimal capital structure also referred to as the “target capital structure”?  For a health care entity, in particular, what are some factors that you must…

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions. 9. What is block ownership? How does it affect corporate governance?

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions. 2. If you expanded and hired additional people to help you, might that give rise to agency problems? Explain your answer

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions. 5. Suppose your company is very successful, and you cash out most of your stock and turn the company over to an elected board of directors. Neither you nor any other stockholders own a controlling interest (this is the…