homework - a. Why is corporate finance important to all...

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a. Why is corporate finance important to all managers? Corporate finance provides the skills managers and helps them to identify and select the corporate strategies and individual projects that add value to their firms. 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 The three main forms of business organization are (1) sole proprietorships, (2) partnerships, and (3) corporations. In addition, several hybrid forms are gaining popularity. These hybrid forms are the limited partnership, the limited liability partnership, the professional corporation, and the s corporation. The proprietorship has three important advantages: (1) it is easily and inexpensively formed, (2) it is subject to few government regulations, and (3) the business pays no corporate income taxes. The proprietorship also has three important limitations: (1) it is difficult for a proprietorship to obtain large sums of capital; (2) the proprietor has unlimited personal liability for the business’s debts, and (3) the life of a business organized as a proprietorship is limited to the life of the individual who created it. c. How do corporations “go public” and continue to grow? What are agency problems? A company goes public when it sells stock to the public in an initial public as the firm grows, it might issue additional stock or debt. An agency problem occurs when the managers of the firm act in their own self interests and not in the interests of the shareholders. d. What should be the primary objective of managers? The corporation’s primary goal is stockholder wealth maximization, which translates to maximizing the price of the firm’s common stock. d.
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homework - a. Why is corporate finance important to all...

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