Solution Manual for Entrepreneurial Finance 7th Edition by J. Chris Leach – Complete Chapters 1-16 & Capstone Cases

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




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 j




INTRODUCTIONjTOjFINANCEjFORjENTREPRENEURS

FOCUS

Thejpurposejofjthisjfirstjchapterjisjtojpresentjanjoverviewjofjwhatjentrepreneurialjfinancejisjabout.jInjdoingjsojwej
hopejtojconveyjtojyoujthejimportancejofjunderstandingjandjapplyingjentrepreneurialjfinancejmethodsjandjtoolsjt
ojhelpjensurejanjentrepreneurialjventurejisjsuccessful.jWejpresentjajlifejcyclejapproachjtojthejteachingjofjentrepre
neurialjfinancejwherejwejcoverjventurejoperatingjandjfinancialjdecisionsjfacedjbyjthejentrepreneurjasjajventurejp
rogressesjfromjanjideajthroughjtojharvestingjthejventure.

LEARNINGjOBJECTIVES

LOj1.1:jCharacterizejthejentrepreneurialjprocess.
LOj1.2:jDescribejentrepreneurshipjandjsomejcharacteristicsjofjentrepreneurs.
LOj1.3:jIndicatejseveraljmegatrendsjprovidingjwavesjofjentrepreneurialjopportunities.jLOj1.4:jListj
andjdescribejthejsevenjprinciplesjofjentrepreneurialjfinance.
LOj1.5:jDiscussjentrepreneurialjfinancejandjthejrolejofjthejfinancialjmanager.jLOj1.6:jDes
cribejthejvariousjstagesjofjajsuccessfuljventure‘sjlifejcycle.
LOj1.7:jIdentify,jbyjlifejcyclejstage,jthejrelevantjtypesjofjfinancingjandjinvestors.jLOj1.8:jUnde
rstandjthejlifejcyclejapproachjusedjinjthisjbook.

CHAPTERjOUTLINE

1.1 THEjENTREPRENEURIALjPROCESS
1.2 ENTREPRENEURSHIPjFUNDAMENTALS
A. WhojisjanjEntrepreneur?
B. BasicjDefinitions
C. EntrepreneurialjTraitsjorjCharacteristics
D. OpportunitiesjExistjButjNotjWithoutjRisks
1.3 SOURCESjOFjENTREPRENEURIALjOPPORTUNITIES
A. SocietaljChanges
B. DemographicjChanges
C. TechnologicaljChanges
D. EmergingjEconomiesjandjGlobaljChanges
E. Crisesjandj―Bubbles‖
F. DisruptivejInnovation


1

, 1.4 PRINCIPLESjOFjENTREPRENEURIALjFINANCE
A. Real,jHuman,jandjFinancialjCapitaljmustjbejRentedjfromjOwnersj(Principlej#1)
B. RiskjandjExpectedjRewardjgojHandjinjHandj(Principlej#2)
C. WhilejAccountingjisjthejLanguagejofjBusiness,jCashjisjthejCurrencyj(Principlej#3)
D. NewjVenturejFinancingjInvolvesjSearch,jNegotiation,jandjPrivacyj(Principlej#4)
E. AjVenture‘sjFinancialjObjectivejisjtojIncreasejValuej(Principlej#5)
F. ItjisjDangerousjtojAssumejthatjPeoplejActjAgainstjTheirjOwnjSelf-
Interestsj(Principlej#6)
G. VenturejCharacterjandjReputationjcanjbejAssetsjorjLiabilitiesj(Principlej#7)
1.5 ROLEjOFjENTREPRENEURIALjFINANCE
1.6 THEjSUCCESSFULjVENTUREjLIFEjCYCLE
A. DevelopmentjStage
B. StartupjStage
C. SurvivaljStage
D. Rapid-GrowthjStage
E. Early-MaturityjStage
F. LifejCyclejStagesjandjthejEntrepreneurialjProcess
1.7 FINANCINGjTHROUGHjTHEjVENTUREjLIFEjCYCLE
A. SeedjFinancing
B. StartupjFinancing
C. First-RoundjFinancing
D. Second-RoundjFinancing
E. MezzaninejFinancing
F. Liquidity-StagejFinancing
G. SeasonedjFinancing
1.8 LIFEjCYCLEjAPPROACHjFORjTEACHINGjENTREPRENEURIALjFINANCEjSUMMARY


DISCUSSIONjQUESTIONSjANDjANSWERS

1. Whatjisjthejentrepreneurialjprocess?

Thejentrepreneurialjprocessjcomprises:jdevelopingjopportunities,jgatheringjresources,jandjmanagingjan
djbuildingjoperationsjwithjthejgoaljofjcreatingjvalue.

2. Whatjisjentrepreneurship?jWhatjarejsomejbasicjcharacteristicsjofjentrepreneurs?

Entrepreneurshipjisjthejprocessjofjchangingjideasjintojcommercialjopportunitiesjandjcreatingjvalue.j Whilejt
herejisjnojprototypicaljentrepreneur,jmanyjarejgoodjatjrecognizingjcommercialjopportunities,jtendjtojbejop
timistic,jandjenvisionjajplanjforjthejfuture.

3. Whyjdojbusinessesjclosejorjceasejoperating?jWhatjarejthejprimaryjreasonsjwhyjbusinessesjfail?