SOLUTION MANUAL FOR Entrepreneurial Finance 7th Edition by J. Leach , Ronald Melicher ISBN:978-0357442043 ALL CHAPTERS COVERED 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE!!!!!

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, Chapter 1 SJ




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUS SJ SJ SJ SJ SJ




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 fina
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nce 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 de
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cisions faced by the entrepreneur as a venture progresses from an idea through to harvesting the ventu
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re.



LEARNING OBJECTIVES SJ




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 1.4: List and
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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 1.6: Describe the
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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 1.8: Understand
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the life cycle approach used in this book.
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CHAPTER OUTLINE SJ




1.1 THE ENTREPRENEURIAL PROCESS
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1.2 ENTREPRENEURSHIP FUNDAMENTALS SJ




A. Who is an Entrepreneur?
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B. Basic Definitions
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C. Entrepreneurial Traits or Characteristics SJ SJ SJ




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




1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES SJ SJ SJ




A. Societal Changes SJ




B. Demographic Changes SJ




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,C. Technological Changes SJ




D. Emerging Economies and Global Changes
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E. Crises and ―Bubbles
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F. Disruptive Innovation SJ




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1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE SJ SJ SJ




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-Interests (Principle #6)
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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 SJ




B. Startup Stage SJ




C. Survival Stage SJ




D. Rapid-Growth Stage SJ




E. Early-Maturity Stage SJ




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




A. Seed Financing
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, B. Startup Financing SJ




C. First-Round Financing SJ




D. Second-Round Financing SJ




E. Mezzanine Financing SJ




F. Liquidity-Stage Financing SJ




G. Seasoned Financing SJ




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE SUMMARY
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DISCUSSION QUESTIONS AND ANSWERS SJ SJ SJ




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, and managing an
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d 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 creating value.
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While there is no prototypical entrepreneur, many are good at recognizing commercial opportunities, te
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nd 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 businesses fail?
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Nearly one- SJ


half of businesses that fail do so because of economic factors including inadequate sales, insufficient
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profits, and industry weakness. Many of the economic factors are directly tied to financing concerns (
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e.g., insufficient profits for investors). Almost 40 percent of business failures not citing economic fact
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ors cite specifically financial causes like excessive debt and insufficient financial capital. The remainin
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g cited reasons for failure include a lack of business and managerial experience, business conflicts, fa
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mily problems, fraud, and disasters. Many businesses close and fail due to financial trouble which is m
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ostly related to lack of sales and unsatisfactory profits.
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