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

SOLUTIONMANUAL b




EntrepreneurialFinance,7thEdition b b b




J.ChrisLeach,RonaldW.Melicher
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Chapters1-16WithCAPSTONECASES
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,TABLE OF CONTENTS b b b




Part1:THEENTREPRENEURIALENVIRONMENT.
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1. IntroductiontoFinanceforEntrepreneurs. b b b b




2. DevelopingtheBusinessIdea. b b b




Part2:ORGANIZINGANDOPERATINGTHEVENTURE.
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3. OrganizingandFinancingaNewVenture. b b b b b




4. PreparingandUsingFinancialStatements. b b b b




5. EvaluatingOperatingandFinancialPerformance. Part3: b b b b b b




PLANNINGFORTHEFUTURE.
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6. ManagingCashFlow. b b




7. TypesandCostsofFinancialCapital.
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8. SecuritiesLawConsiderationsWhenObtainingVentureFinancing. Part4:
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CREATINGANDRECOGNIZINGVENTUREVALUE.
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9. ProjectingFinancialStatements. b b




10. ValuingEarly-StageVentures. b b




11. VentureCapitalValuationMethods. b b b




Part5:STRUCTURINGFINANCINGFORTHEGROWINGVENTURE.
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12. ProfessionalVentureCapital. b b




13. OtherFinancingAlternatives. b b




14. SecurityStructuresandDeterminingEnterpriseValues. Part6:
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EXITANDTURNAROUNDSTRATEGIES.
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15. HarvestingtheBusinessVentureInvestment. b b b b




16. FinanciallyTroubledVentures:TurnaroundOpportunities? Part7: b b b b b b




CAPSTONECASES.
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Case1.Eco-Products,Inc. Case2.
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SpatialTechnology,
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,Chapter1 b




INTRODUCTIONTOFINANCEFORENTREPRENEURS FOCUS b b b b b




Thepurposeofthisfirstchapter isto presentan overview ofwhatentrepreneurial financeis about. In
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doing so we hope to convey to you theimportance of understanding andapplying entrepreneurial
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financemethodsandtoolstohelpensureanentrepreneurialventureis successful.Wepresentalifecycle
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approach to theteachingof entrepreneurial financewhere wecover ventureoperating andfinancial
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decisionsfacedby theentrepreneurasaventure progressesfrom anideathrough to harvestingthe
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venture.
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LEARNINGOBJECTIVES b




LO1.1:Characterizetheentrepreneurialprocess.
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LO1.2:Describeentrepreneurship andsomecharacteristicsofentrepreneurs. LO1.3:
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Indicateseveralmegatrendsproviding wavesofentrepreneurial opportunities.LO
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1.4:Listanddescribethesevenprinciplesofentrepreneurial finance.
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LO 1.5:Discussentrepreneurial financeandthe role of the financial manager.LO 1.6:
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Describethe various stagesof asuccessful venture‘s life cycle.
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LO 1.7:Identify, by life cycle stage,the relevanttypesof financing and investors.LO
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1.8:Understand thelife cycle approach usedin thisbook.
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CHAPTEROUTLINE b




1.1 THEENTREPRENEURIALPROCESS b b




1.2 ENTREPRENEURSHIPFUNDAMENTALS b




A. Who isanEntrepreneur? b b b




B. BasicDefinitions b




C. EntrepreneurialTraitsorCharacteristics b b b




D. OpportunitiesExistButNot WithoutRisks b b b b b




1.3 SOURCESOFENTREPRENEURIALOPPORTUNITIES b b b




A. SocietalChanges b




B. DemographicChanges b




C. TechnologicalChanges b




D. EmergingEconomiesandGlobalChanges b b b b




E. Crises and ―Bubbles‖ b b




F. DisruptiveInnovation b




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, 1.4 PRINCIPLESOFENTREPRENEURIALFINANCE b b b




A. Real,Human,and Financial Capital mustbe Rented fromOwners(Principle #1)
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B. RiskandExpectedReward go Handin Hand (Principle#2) b b b b b b b b b




C. WhileAccountingisthe Language ofBusiness,Cash isthe Currency (Principle#3) b b b b b b b b b b b b




D. New VentureFinancing InvolvesSearch,Negotiation,andPrivacy(Principle #4)
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E. A Venture‘s Financial Objectiveis to Increase Value (Principle#5)
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F. ItisDangerousto Assume thatPeople Act Against TheirOwn Self-
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Interests(Principle#6) b b




G. VentureCharacter andReputationcanbeAssets or Liabilities(Principle#7) b b b b b b b b b b




1.5 ROLEOFENTREPRENEURIALFINANCE
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1.6 THESUCCESSFULVENTURE LIFE CYCLE
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A. DevelopmentStage b




B. StartupStage b




C. SurvivalStage b




D. Rapid-GrowthStage b




E. Early-MaturityStage b




F. LifeCycleStagesandtheEntrepreneurialProcess b b b b b b




1.7 FINANCINGTHROUGHTHE VENTURE LIFE CYCLE b b b b b




A. SeedFinancing b




B. StartupFinancing b




C. First-RoundFinancing b




D. Second-RoundFinancing b




E. MezzanineFinancing b




F. Liquidity-StageFinancing b




G. SeasonedFinancing b




1.8 LIFECYCLEAPPROACH FORTEACHINGENTREPRENEURIALFINANCE
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SUMMARY
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DISCUSSIONQUESTIONSANDANSWERS b b b




1. Whatistheentrepreneurial process?
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Theentrepreneurialprocesscomprises:developingopportunities,gatheringresources,
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bandmanaging andbuildingoperationswith thegoal ofcreatingvalue. b b b b b b b b b




2. Whatis entrepreneurship? What are somebasiccharacteristicsof entrepreneurs?
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Entrepreneurshipistheprocessofchangingideasinto commercial opportunitiesand creatingvalue. b b b b b b b b b b b b




While thereisno prototypical entrepreneur,manyare good atrecognizing commercial
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opportunities,tendto beoptimistic,andenvision aplanfor thefuture.
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3. Whydo businesses close or ceaseoperating? Whatare the primaryreasons why businesses fail?
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