Questions and Problem Sets 1 Emily Evans FIN/370 Questions and Problem Sets February 27, 2017 John Wetherington
Questions and Problem Sets 2 Chapter 1: Questions 3 & 11 (Concepts Review and Critical Thinking Questions) Corporations: What is the primary disadvantage of the corporate form of organization? Name at least two advantages of corporate organization. The primary disadvantage of the corporate form is the double taxation to shareholders of distributed earnings and dividends. Some advantages would include: limited liability, ease of transferability, ability to raise capital, and unlimited life. Goal of the Firm: Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. Assuming, the current stock value reflects the risk, timing, and magnitude of all future cash flows, both short term and long term. If this applies, then the statement is false.
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