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

SOLUTIONMANUAL v




EntrepreneurialFinance,7thEdition
v v v




J.Chris Leach,RonaldW. Melicher
vv vv vv vv vv




Chapters1-16WithCAPSTONE CASES
v v v v v v

,TABLE OF CONTENTS vv vv vv




Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
vv vv vv vv




1. Introduction to Finance for Entrepreneurs. vv vv vv vv




2. Developing the Business Idea. vv vv vv




Part 2: ORGANIZING AND OPERATING THE VENTURE.
vv vv vv vv vv vv




3. Organizing and Financing a New Venture. vv vv vv vv vv




4. Preparing and Using Financial Statements. vv vv vv vv




5. Evaluating Operating and Financial Performance. Part vv vv vv vv v v




3: PLANNING FOR THE FUTURE.
vv vv vv vv vv




6. Managing Cash Flow. vv vv




7. Types and Costs of Financial Capital.
vv vv vv vv vv




8. Securities Law Considerations When Obtaining Venture Financing. Part 4:
vv vv vv vv vv vv v v vv




CREATING AND RECOGNIZING VENTURE VALUE.
vv vv vv vv vv




9. ProjectingFinancial Statements. v vv




10. ValuingEarly-Stage Ventures. v vv




11. Venture Capital Valuation Methods. vv vv vv




Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
vv vv vv vv vv vv vv




12. ProfessionalVenture Capital. vv vv




13. OtherFinancing Alternatives. v vv




14. Security Structures and Determining Enterprise Values. Part 6:
vv vv vv vv vv v v vv




EXIT AND TURNAROUND STRATEGIES.
vv vv vv vv




15. Harvestingthe Business Venture Investment. v vv vv vv




16. Financially TroubledVentures:TurnaroundOpportunities? Part 7: vv v v v v v vv




CAPSTONE CASES.
vv vv




Case 1. Eco-Products, Inc. Case
vv vv vv v v




2. Spatial Technology,
vv vv vv

,Chapter 1 vv




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUS vv vv vv vv v v




The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In
vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv v v vv




doing so we hope to convey to you the importance of understanding and applying entrepreneurial
vv vv vv vv vv vv vv vv vv vv vv vv vv vv v v




finance methods and tools to help ensure an entrepreneurial venture is successful.We present a life
vv vv vv vv vv vv vv vv vv vv vv v v vv vv vv




cycle approach to the teaching of entrepreneurial finance where we cover venture operating and
vv vv vv vv vv vv vv vv vv v v vv vv vv vv




financial decisions faced by the entrepreneur as a venture progresses from an idea through to
vv vv vv vv vv vv vv vv vv v v vv vv vv vv vv




harvesting the venture.
vv vv vv




LEARNING OBJECTIVES vv




LO 1.1: Characterize the entrepreneurial process.
vv vv vv vv vv




LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs. LO
vv vv vv vv vv vv vv vv v v




1.3: Indicate several megatrends providing waves of entrepreneurial
vv vv vv vv vv vv vv vv




vopportunities.LO 1.4: List and describe the seven principles of entrepreneurial
v vv vv vv vv vv vv vv vv vv




v finance.
v




LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO
vv vv vv vv vv vv vv vv vv vv v v




1.6: Describe the various stages of a successful venture‘s life cycle.
vv vv vv vv vv vv vv vv vv vv v v




LO 1.7: Identify, by life cycle stage, the relevant types of financing and
vv vv vv vv vv vv vv vv vv vv vv vv




vinvestors.LO 1.8: Understand the life cycle approach used in this book.
v vv vv vv vv vv vv vv vv vv vv




CHAPTER OUTLINE vv




1.1 THE ENTREPRENEURIALPROCESS vv vv




1.2 ENTREPRENEURSHIPFUNDAMENTALS v




A. Who is an Entrepreneur? vv vv vv




B. Basic Definitions vv




C. Entrepreneurial Traits or Characteristics vv vv vv




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




1.3 SOURCES OF ENTREPRENEURIALOPPORTUNITIES vv vv vv




A. Societal Changes vv




B. DemographicChanges vv




C. Technological Changes vv




D. EmergingEconomies and Global Changes vv vv vv vv




E. Crises and ―Bubbles‖ vv vv




F. Disruptive Innovation vv




1

, 1.4 PRINCIPLES OFENTREPRENEURIAL FINANCE vv v vv




A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
vv vv vv vv vv vv vv vv vv vv vv




B. Risk and Expected Reward go Hand in Hand (Principle #2)
vv vv vv vv vv vv vv vv vv




C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
vv vv vv vv vv vv vv vv vv vv vv vv




D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
vv vv vv vv vv vv vv vv vv




E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
vv vv vv vv vv vv vv vv vv




F. It is Dangerous to Assume that People Act Against Their Own Self-
vv vv vv vv vv vv vv vv vv vv vv




Interests(Principle #6) v v vv




G. Venture Character and Reputation can be Assets or Liabilities (Principle #7) vv vv vv vv vv vv vv vv vv vv




1.5 ROLE OF ENTREPRENEURIAL FINANCE
vv vv vv




1.6 THE SUCCESSFUL VENTURE LIFE CYCLE
vv vv vv vv




A. DevelopmentStage v




B. Startup Stage vv




C. SurvivalStage v




D. Rapid-GrowthStage v




E. Early-MaturityStage v




F. Life Cycle Stages and the Entrepreneurial Process vv vv vv vv vv vv




1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE vv vv vv vv vv




A. Seed Financing vv




B. Startup Financing vv




C. First-RoundFinancing v




D. Second-RoundFinancing v




E. Mezzanine Financing vv




F. Liquidity-StageFinancing v




G. Seasoned Financing vv




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE
vv vv vv vv vv vv




SUMMARY
v v




DISCUSSION QUESTIONS AND ANSWERS vv vv vv




1. What is the entrepreneurial process?
vv vv vv vv




The entrepreneurial process comprises: developing opportunities, gathering resources,
vv vv vv vv vv vv vv




v andmanaging and building operations with the goal of creating value.
v vv vv vv vv vv vv vv vv vv




2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
vv vv vv vv vv vv vv vv vv




Entrepreneurship is the process of changing ideas into commercial opportunities and vv vv vv vv vv vv vv vv vv vv




v creatingvalue. While there is no prototypical entrepreneur, many are good at recognizing
v vv vv vv vv vv vv vv vv vv vv vv vv




v commercial opportunities, tend to be optimistic, and envision a plan for the future.
v vv vv vv vv vv vv vv vv vv vv vv vv




3. Why do businesses close or cease operating? What are the primary reasons why businesses
vv vv vv vv vv vv vv vv vv vv vv vv vv




vfail?
v