SOLUTION MANUAL For Entrepreneurial Finance, 7th Edition by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16, Complete With CAPSTONE CASES

SOLUTION MANUAL For Entrepreneurial Finance, 7th Edition
by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16,
Complete With CAPSTONE CASES

,TABLE OF CONTENTS nj nj nj




Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
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1. Introduction to
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Finance for Entrepreneurs.
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2. Developing the Business Idea.
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Part 2: ORGANIZING AND OPERATING THE VENTURE.
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3. Organizing and Financing a New Venture.
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4. Preparing and Using Financial Statements.
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5. Evaluating Operating and Financial Performance.
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Part 3: PLANNING FOR THE FUTURE.
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6. Managing Cash Flow.
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7. Types and Costs of Financial Capital.
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8. Securities Law Considerations When Obtaining Venture Financing.
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Part 4: CREATING AND RECOGNIZING VENTURE VALUE.
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9. Projecting Financial Statements.
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10. Valuing Early-Stage Ventures.
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11. Venture Capital Valuation Methods.
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Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
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12. Professional Venture Capital.
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13. Other Financing Alternatives.
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14. Security Structures and Determining Enterprise Values.
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Part 6: EXIT AND TURNAROUND STRATEGIES.
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15. Harvesting the Business Venture Investment.
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16. Financially Troubled Ventures: Turnaround Opportunities?
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Part 7: CAPSTONE CASES.
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Case 1. Eco-Products, Inc.
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Case 2. Spatial Technology,
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,Chapter 1 nj




INTRODUCTION TO FINANCE FOR ENTREPRENEURS nj nj nj nj




FOCUS

The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In
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doing so we hope to convey to you the importance of understanding and applying entrepreneurial
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finance methods and tools to help ensure an entrepreneurial venture is successful.We present a life cycle
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approach to the teaching of entrepreneurial finance where we cover venture operating and financial
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decisions faced by the entrepreneur as a venture progresses from an idea through to harvesting the
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venture.
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LEARNING OBJECTIVES nj




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs.
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LO 1.3: Indicate several megatrends providing waves of entrepreneurial opportunities.LO
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1.4: List and describe the seven principles of entrepreneurial finance.
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LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO
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1.6: Describe the various stages of a successful venture‘s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors.LO
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1.8: Understand the life cycle approach used in this book.
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CHAPTER OUTLINE nj




1.1 THE ENTREPRENEURIAL PROCESS nj nj


1.2 ENTREPRENEURSHIP FUNDAMENTALS nj


A. Who is an Entrepreneur? nj nj nj


B. Basic Definitions nj


C. Entrepreneurial Traits or Characteristics nj nj nj


D. Opportunities Exist But Not Without Risks nj nj nj nj nj


1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES nj nj nj


A. Societal Changes nj


B. Demographic Changes nj


C. Technological Changes nj


D. Emerging Economies and Global Changes nj nj nj nj


E. Crises and ―Bubbles‖ nj nj


F. Disruptive Innovation nj




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, 1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE nj nj nj


A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
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B. Risk and Expected Reward go Hand in Hand (Principle #2)
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C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
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D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
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F. It is Dangerous to Assume that People Act Against Their Own Self-
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Interests(Principle #6) nj nj


G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
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1.5 ROLE OF ENTREPRENEURIAL FINANCE
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1.6 THE SUCCESSFUL VENTURE LIFE CYCLE
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A. Development Stage nj


B. Startup Stage nj


C. Survival Stage nj


D. Rapid-Growth Stage nj


E. Early-Maturity Stage nj


F. Life Cycle Stages and the Entrepreneurial Process
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1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE nj nj nj nj nj


A. Seed Financing nj


B. Startup Financing nj


C. First-Round Financing nj


D. Second-Round Financing nj


E. Mezzanine Financing nj


F. Liquidity-Stage Financing nj


G. Seasoned Financing nj


1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL
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FINANCESUMMARY
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DISCUSSION QUESTIONS AND ANSWERS nj nj nj




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources,
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andmanaging and building operations with the goal of creating value.
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2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and creatingvalue.
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While there is no prototypical entrepreneur, many are good at recognizing commercial
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opportunities, tend to be optimistic, and envision a plan for the future.
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3. Why do businesses close or cease operating? What are the primary reasons why businessesfail?
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