Solution manual for entrepreneurial finance 7th edition j chris leach

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

,TABLE OF CONTENTS ls ls ls




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 ls




INTRODUCTIONlsTOlsFINANCElsFORlsENTREPRENEURS

FOCUS

Thelspurposelsoflsthislsfirstlschapterlsislstolspresentlsanlsoverviewlsoflswhatlsentrepreneuriallsfinancelsislsabout.lsInlsdoin
glssolswelshopelstolsconveylstolsyoulsthelsimportancelsoflsunderstandinglsandlsapplyinglsentrepreneuriallsfinancelsmeth
odslsandlstoolslstolshelplsensurelsanlsentrepreneuriallsventurelsislssuccessful.slWelspresentlsalslifelscyclelsapproachlstolsthe
lsteachinglsoflsentrepreneuriallsfinancelswherelswelscoverlsventurelsoperatinglsandlsfinanciallsdecisionslsfacedlsbylsthelse

ntrepreneurlsaslsalsventurelsprogresseslsfromlsanlsidealsthroughlstolsharvestinglsthelsventure.

LEARNINGlsOBJECTIVES

LOls1.1:lsCharacterizelsthelsentrepreneuriallsprocess.
LOls1.2:lsDescribelsentrepreneurshiplsandlssomelscharacteristicslsoflsentrepreneurs.
LOls1.3:lsIndicatelsseverallsmegatrendslsprovidinglswaveslsoflsentrepreneuriallsopportunities.sLl Ols1.4:ls
Listlsandlsdescribelsthelssevenlsprincipleslsoflsentrepreneuriallsfinance.
LOls1.5:lsDiscusslsentrepreneuriallsfinancelsandlsthelsrolelsoflsthelsfinanciallsmanager.slLOls1.6:l
sDescribelsthelsvariouslsstageslsoflsalssuccessfullsventure‘slslifelscycle.

LOls1.7:lsIdentify,lsbylslifelscyclelsstage,lsthelsrelevantlstypeslsoflsfinancinglsandlsinvestors.slLOls1.8:ls
Understandlsthelslifelscyclelsapproachlsusedlsinlsthislsbook.

CHAPTERlsOUTLINE

1.1 THElsENTREPRENEURIALlsPROCESS
1.2 ENTREPRENEURSHIPlsFUNDAMENTALS
A. WholsislsanlsEntrepreneur?
B. BasiclsDefinitions
C. EntrepreneuriallsTraitslsorlsCharacteristics
D. OpportunitieslsExistlsButlsNotlsWithoutlsRisks
1.3 SOURCESlsOFlsENTREPRENEURIALlsOPPORTUNITIES
A. SocietallsChanges
B. DemographiclsChanges
C. TechnologicallsChanges
D. EmerginglsEconomieslsandlsGloballsChanges
E. Criseslsandls―Bubbles‖
F. DisruptivelsInnovation


1

, 1.4 PRINCIPLESlsOFlsENTREPRENEURIALlsFINANCE
A. Real,lsHuman,lsandlsFinanciallsCapitallsmustlsbelsRentedlsfromlsOwnersls(Principlels#1)
B. RisklsandlsExpectedlsRewardlsgolsHandlsinlsHandls(Principlels#2)
C. WhilelsAccountinglsislsthelsLanguagelsoflsBusiness,lsCashlsislsthelsCurrencyls(Principlels#3)
D. NewlsVenturelsFinancinglsInvolveslsSearch,lsNegotiation,lsandlsPrivacyls(Principlels#4)
E. AlsVenture‘slsFinanciallsObjectivelsislstolsIncreaselsValuels(Principlels#5)
F. ItlsislsDangerouslstolsAssumelsthatlsPeoplelsActlsAgainstlsTheirlsOwnlsSelf-
Interestssl(Principlels#6)
G. VenturelsCharacterlsandlsReputationlscanlsbelsAssetslsorlsLiabilitiesls(Principlels#7)
1.5 ROLElsOFlsENTREPRENEURIALlsFINANCE
1.6 THElsSUCCESSFULlsVENTURElsLIFElsCYCLE
A. DevelopmentlsStage
B. StartuplsStage
C. SurvivallsStage
D. Rapid-GrowthlsStage
E. Early-MaturitylsStage
F. LifelsCyclelsStageslsandlsthelsEntrepreneuriallsProcess
1.7 FINANCINGlsTHROUGHlsTHElsVENTURElsLIFElsCYCLE
A. SeedlsFinancing
B. StartuplsFinancing
C. First-RoundlsFinancing
D. Second-RoundlsFinancing
E. MezzaninelsFinancing
F. Liquidity-StagelsFinancing
G. SeasonedlsFinancing
1.8 LIFElsCYCLElsAPPROACHlsFORlsTEACHINGlsENTREPRENEURIALlsFINANCEslSUMMAR
Y


DISCUSSIONlsQUESTIONSlsANDlsANSWERS

1. Whatlsislsthelsentrepreneuriallsprocess?

Thelsentrepreneuriallsprocesslscomprises:lsdevelopinglsopportunities,lsgatheringlsresources,lsandsm
l anagin

glsandlsbuildinglsoperationslswithlsthelsgoallsoflscreatinglsvalue.

2. Whatlsislsentrepreneurship?lsWhatlsarelssomelsbasiclscharacteristicslsoflsentrepreneurs?

Entrepreneurshiplsislsthelsprocesslsoflschanginglsideaslsintolscommerciallsopportunitieslsandlscreatingsvl alue.l s W
hilelstherelsislsnolsprototypicallsentrepreneur,lsmanylsarelsgoodlsatlsrecognizinglscommerciallsopportunities,lste
ndlstolsbelsoptimistic,lsandlsenvisionlsalsplanlsforlsthelsfuture.

3. Whylsdolsbusinesseslscloselsorlsceaselsoperating?lsWhatlsarelsthelsprimarylsreasonslswhylsbusinessessfl ail?