services to the operation. C is very concerned and says he's worried that D would try to mess with a successful menu. A is not concerned and says "maybe he could help, but what's most important is that we need the money." What advice would you give to the partners? What should D be advised?
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- John Snow has recently retired, and he received a large lump sum settlement from his employer. He would like to invest this money to achieve a stable long term income. He is considering investing in the following two companies: Allied Grocers (AG) are a 3-year-old online grocery retailer that specializes in delivering a wide selection of quality food products through an online platform. Beta Solutions (BS) is an established 10-year-old electronics company that is known for selling the most innovative electronic products and software solutions. Selected financial data for 2019 AG BS Average total assets 1,500,000 4,000,000 Average # of common shares outstanding (no preferred shares) 10,000 10,000 Dividends paid 10,000 50,000 Current Market price per share $95 $165 Net sales 1,300,000 6,300,000 Cost of goods sold 900,000 4,200,000 Gross profit 400,000 2,100,000 Operating Expenses: Administrative…Ali is currently working as a human resource manager for a company and earns a good salary . He is planning to pursue a Master of Business Administration (MBA ) degree . He recently received an offer from University A, which included the cost of tuition fees. If Ali decided to go for the MBA study , his company would stop paying his salary . At the same time, if Ali completed his MBA degree , he would earn a higher salary than his current one . Furthermore , Ali has recently purchased an apartment in the city and moved in. For Ali , when considering whether or not to go for the MBA study, the cost of the apartment is referred to as: a. Incremental revenue . b. Sunk cost c. of the given answers . d. Incremental cost. e. Opportunity cost .Carrie Haute buys a fast-food restaurant for $500,000. She is very successfuland sells the business 6 years later for $1,375,000. What is Carrie’s internalrate of return?
- Three friends are starting a home painting business while they are in college. One of the friends is from a wealthy family and will finance the startup costs – website development, advertising and purchasing the paint, in return for a 50% share of the business. The other two friends will each own 25% of the business. They may have two or three employees who will be paid by the job and will not own any of the business. They expect to distribute to themselves all the earnings of the business every month. Once they graduate from college, they expect to leave the business and have their brothers and sisters take over. They have no plans to grow the business beyond one or two projects at a time. Which form of ownership should they use as they start up this business?Mary operates a successful bicycle shop as a sole proprietor. After several years of profits, in 2020 she decided to branch out and turn her baking hobby into a business by opening a cupcake shop. She spent a total of $52,560 on securing a lease for a prime location (real estate agent’s and attorney’s fees), training em-ployees, and pre-opening advertising. She opened “BabyCakes” on May 1, 2020. In preparing a Schedule C to be included with Mary’s 2020 return, you included $___ as a deduction for start-up costs. Your task: State and explain the correct amount of Mary’s 2020 start-up costs deduction.Heather and Dan Holt met while both were employed in the interior trim and upholstery department of an auto manufacturer. After their marriage, they decided to earnsomeextra income by doing small jobs involving canvas, vinyl, and upholstered products. Their work was considered excellent, and at the urging of their customers, they decided to go into business for themselves, operating out of the basement of the house they owned. To do this, they invested $120,000 cash in their business. They spent $10,500 for a sewing machine (expected life 10 years) and $12,000 for other miscelianeous tools and equipment (expected life 5 years). They undertook only custom work, with the customers purchasing the required materials, to avoid stocking any inventory other than supplies. Generally, they required an advance deposit on all jobs. The business seemed successful from the start, as the Holts received orders from many customers. But they felt something was wrong. They worked hard and charged…
- The Bainter family is moving to a new town and needs a place to live. The Bainters have narrowed their search to two houses they think will work for their family. The first house is a rental. The monthly rent is listed at $1,190, with the expectation that it will increase 1.7% each year. The second house is available for purchase. The sale price is listed at $195,000, and the Bainters have been approved for a loan that would allow them to purchase the home and pay for it over 30 years. Cost of Renting To estimate the cost of renting, the Bainters read through the rental agreement to determine for what types of costs they would need to budget. These costs include fees, renters' insurance, and utilities. The Bainters also research average prices for anything the landlord would not provide, such as renters' insurance. The Bainters realize they will have approximately the same costs for electricity and natural gas whether they rent or purchase, so they decide to exclude…At the end of her first year of university, Sandra Robinson decided that she should start a business to help finance her education, so she set up her own courier service. She invested savings of $2,100 in the company, which she called Oriole Ltd. In addition, her parents lent the company $3,800 to help it get started. Since this was a business venture, Sandra insisted on paying interest on this loan, and her parents agreed to charge a rate of 6% per year. Sandra then negotiated the purchase of a used car for the business for $8,500. The company made a down payment of $2,300 on the car and financed the remainder ofthe purchase price at an interest rate of 9% per year. Due to all ofthe kilometres that would be put on the car while it was used in the courier business, Sandra estimated that the car could be sold at the end ofthe summer for $7,000. Oriole began operations on May 1 and continued until August 31.Although Sandra did not keep any formal accounting records, at the end ofthe…Ben and Eric are opening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competingcomic bookstore in the area. Their fundamental decision is how to organize the business and they anticipate a substantialprofit in the first year, with the ability to sell franchises in the future. Although they have enough to start the business nowas a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for thelong term. They seek your advice.Requirements1. What is the main advantage they gain by selecting a corporate form of business now?2. Distinguish between par value and issue price.3. If they decide to issue $1 par common stock and anticipate an initial market price of $80 per share, how many shareswill they need to issue to raise $4,000,000?4. The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding theirdecision-making process. They assume that the…
- Ben and Eric are opening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competingcomic bookstore in the area. Their fundamental decision is how to organize the business and they anticipate a substantialprofit in the first year, with the ability to sell franchises in the future. Although they have enough to start the business nowas a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for thelong term. They seek your advice.Requirements1. What is the main advantage they gain by selecting a corporate form of business now?2. Distinguish between par value and issue price.3. If they decide to issue $1 par common stock and anticipate an initial market price of $80 per share, how many shareswill they need to issue to raise $4,000,000?4. The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding theirdecision-making process. They assume that the…Clara Hammond persuaded her daughter, Never-Do-Well to give up her secretarial work and read BSc (Accounting Option) at Ghana Communication Technology University by promising to pay her GH¢1,500 maintenance fee per month. After the daughter had begun the course, the mother bought a house at Tesano, so that the daughter could live there rent-free. Eventually, after the daughter had had more than three unsuccessful attempt at passing business law examinations, the mother and daughter fell out. The mother sought to gain possession of the house, and the daughter refused. Advise Clara Hammond and Never-Do-Well. what is the legal issue or law?Clara Hammond persuaded her daughter, Never-Do-Well to give up her secretarial work and read BSc (Accounting Option) at Ghana Communication Technology University by promising to pay her GH¢1,500 maintenance fee per month. After the daughter had begun the course, the mother bought a house at Tesano, so that the daughter could live there rent-free. Eventually, after the daughter had had more than three unsuccessful attempt at passing business law examinations, the mother and daughter fell out. The mother sought to gain possession of the house, and the daughter refused. Advise Clara Hammond and Never-Do-Well. with conclusion advice both parties?