fin504_week_1_solution_GR - Monsanto Corporation Purchase...

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Monsanto CorporationPurchase of New EquipmentCost-Benefit AnalysisBenefits with the new equipmen ###Less: Benefits with the old equ###Marginal (added) benefits of the###Cost of new equipment###Less: Proceeds from the sale o###Marginal (added) costs of the N###Net benefit of the proposed purchas###
P1-1Investment=$25000Outstanding debt=$60000Outstanding debts exceed the investment by=$35000a)Sole proprietorshipIn first case if the company is sole proprietorship, then the liability of proprietor is unlimited so in this case Merideth Harper will be liable to pay the exceeded debt of $ 35,000 from his personal properties.b)50-50 partneshipin second case of 50-50 partnership with ms. Harper and Christopher Black, the liabilities of partners are unlimited.CorrectSo Merideth will be liable to the outstanding debts of $35,000 from his personal properties.c)CorporationIn third case of corporation, the liabilites of stockholders are limited only to the extent of their investment so in this case Merideth will be liable to the debt holders only to the extent of $ 25,000 and remaining amount of debts $ 35,000 can not be recovered from his personal properties.

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