Entrepreneurial Finance 7th Edition Solution Manual | Leach & Melicher – 2025 Step-by-Step Startup & Valuation Solutions

SOLUTIONMANUALFOR w w




EntrepreneurialFinance,7thEditionJ.ChrisLeach(Author),
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Ronald W. Melicher (Author)
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Chapter1-16WithCasesProducts&SpatialTech
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,Chapter1 w




INTRODUCTIONTOFINANCEFORENTREPRENEURS FOCUS w w w w w




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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financemethodsandtoolsto helpensurean entrepreneurialventureissuccessful. We present a life
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cycle approach to the teaching of entrepreneurial finance where we cover venture operating and
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financial decisions faced by the entrepreneur as a venture progresses from an idea through to
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harvesting the venture.
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LEARNING OBJECTIVES w




LO1.1: Characterizethe entrepreneurial process.
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LO1.2:Describe entrepreneurship and some characteristics ofentrepreneurs.
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LO1.3:Indicateseveral megatrendsprovidingwaves ofentrepreneurial opportunities. LO
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1.4: List and describe the seven principles of entrepreneurial finance.
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LO1.5:Discuss entrepreneurial financeand therole ofthefinancialmanager. LO 1.6:
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Describe the various stages of a successful venture‘s life cycle.
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LO1.7: Identify, bylifecyclestage, therelevant 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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CHAPTEROUTLINE w




1.1 THEENTREPRENEURIALPROCESS w w




1.2 ENTREPRENEURSHIP FUNDAMENTALS w




A. Who is an Entrepreneur? w w w




B. Basic Definitions w




C. Entrepreneurial Traits or Characteristics w w w




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




1.3 SOURCESOFENTREPRENEURIALOPPORTUNITIES w w w




A. Societal Changes w




B. DemographicChanges w




C. TechnologicalChanges w




D. EmergingEconomiesand Global Changes w w w w




E. Crisesand―Bubbles‖ w w




F. Disruptive Innovation w




1

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, 2 Chapter6: Managing Cash Flow w w w w




1.4 PRINCIPLESOFENTREPRENEURIALFINANCE w w w




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) w w w w w w w w w




C. While Accountingis the Language of Business, Cash is the Currency (Principle #3)
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D. New VentureFinancing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‘sFinancial Objective isto IncreaseValue (Principle#5)
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F. It is Dangerous to Assume thatPeople Act Against Their Own Self-Interests
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(Principle #6) w w




G. VentureCharacter and Reputation can be Assets orLiabilities(Principle#7) w w w w w w w w w w




1.5 ROLEOF ENTREPRENEURIAL FINANCE w w w




1.6 THESUCCESSFULVENTURE LIFE CYCLE
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A. DevelopmentStage w




B. Startup Stage w




C. Survival Stage w




D. Rapid-GrowthStage w




E. Early-Maturity Stage w




F. Life CycleStagesand theEntrepreneurial Process w w w w w w




1.7 FINANCINGTHROUGH THE VENTURE LIFE CYCLE w w w w w




A. Seed Financing w




B. Startup Financing w




C. First-RoundFinancing w




D. Second-RoundFinancing w




E. Mezzanine Financing w




F. Liquidity-StageFinancing w




G. Seasoned Financing w




1.8 LIFECYCLEAPPROACHFORTEACHINGENTREPRENEURIALFINANCE
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SUMMARY
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DISCUSSION QUESTIONS AND ANSWERS w w w




1. What is the entrepreneurial process?
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Theentrepreneurialprocesscomprises:developingopportunities,gatheringresources,and
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managing and building operations with the goal of creating value.
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2. Whatis entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurshipisthe process of changingideasinto commercial opportunities andcreating w w w w w w w w w w w




value. 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. Whydobusinesses close or ceaseoperating? What aretheprimaryreasons why businesses fail?
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