Exam 12: A Firms Sources of Financing

Williams Alternative Power,Inc. ,a company developing solar panels,has done considerable research and limited production during its two year life.It is about ready for its IPO.At this stage of its life cycle,its ability to attract venture capital is:

Granville owns a construction company and would like to purchase a mobile construction office.The bank would likely offer him a _____ mortgage.

Connie owns a small but growing company that produces gorilla glass for smartphones.One possible source of funding might be:

Gina owns a clothing resale store in a low-income neighborhood.Since opening,the store has hired five employees and is making a small profit.The store is the only business in her area and often sponsors fundraisers at the location.Since the store is in need of expansion capital,what type of funding should Gina to and why?

Discuss reasons a business would lease as opposed to purchasing equipment.

Janice loves to cook and go backpacking,and she had an idea for a backpacking cookbook that would combine ultralight ingredients into interesting and appetizing meals.However,she needs the money to research and test the recipes as well as cover printing and marketing expenses.How could Janice use the different crowdfunding options,donations,rewards,pre-purchase,or equity-based,to finance her cookbook?

Business loans are the primary source of financing for startups.

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -A very large payment required about halfway through the term over which payments were calculated,repaying the loan balance in full

Crowdfunding works strictly with individual donations made over the Internet.

What are the tradeoffs between profitability,risk,and control that should be considered when choosing between debt and equity?

State and local governments are becoming less involved in financing new businesses.

Elyse wants to calculate her return on equity but has forgotten the formula.You tell her that return on equity equals

Private placement

The basic factors that determine how a firm is financed are restricted to the firm's past economic performance,the nature of its assets,and the personal preferences of owner(s)with respect to the marketing mix.

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -The issuance of stock to be traded in public financial markets

Barry needs financing to start his inner-city venture.His goal is to provide part-time employment for at-risk youths to keep them off the streets and engaged in learning marketable skills.Barry may find some assistance from:

When a stock sale is restricted to private placement,an entrepreneur can avoid many of the demanding requirements of the securities laws.

A small business that needs to purchase real estate could apply for a 7(a)guaranty loan.

Lyman's business has grown to 400 employees with annual revenues of $15 million.He would like to expand further but needs another $5 million.He should consider:

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -The process of raising very small investments from a large number of investors via the Internet