Fin 5080 Mini Case

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Mini Case Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle De la Torre, a professional tennis player who has just come to the United States from Chile. De la Torre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. De la Torre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. Financial system to Della Torre. a. Why is corporate finance important to all managers? Corporate finance is important to all manager because it has skills that all managers need to, examples are: 1. Identify and select the corporate strategies and individual projects that add value to their firms. 2. Forecast the funding requirements of their company , and devise strategies for acquiring those funds b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. 1. Sole Proprietorship 2. Partnership 3. Corporation Proprietorship and Partnership Advantages: Ease of formation, Subject to few regulations, no corporate income taxes. Disadvantages: Limited life, unlimited liability, Difficult to raise capital to support growth. Corporation Is a legal entity separate from its owners and managers, file papers of incorporations with state by charter and by laws? Advantages: Unlimited life, easy transfer of ownership, limited liability and easy of raising capital. Disadvantages: Double taxation, cost of set-up and report filing. c. How do corporations go

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