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

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EntrepreneurialFinance,7thEdition v v v




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




Part 1:THE ENTREPRENEURIAL ENVIRONMENT.
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1. Introductionto Finance for Entrepreneurs. v v v v




2. Developingthe Business Idea. v v v




Part 2: ORGANIZING AND OPERATING THE VENTURE.
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3. Organizing andFinancing a New Venture. v v v v v




4. PreparingandUsing Financial Statements. v v v v




5. EvaluatingOperatingandFinancial Performance. Part 3: v v v v v v




PLANNING FOR THE FUTURE.
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6. Managing Cash Flow. v v




7. Types and Costs of Financial Capital.
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8. Securities Law ConsiderationsWhenObtainingVenture Financing. Part 4:
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CREATING AND RECOGNIZING VENTURE VALUE.
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9. ProjectingFinancialStatements. v v




10. ValuingEarly-StageVentures. v v




11. Venture CapitalValuationMethods. v v v




Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
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12. ProfessionalVentureCapital. v v




13. OtherFinancingAlternatives.
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14. SecurityStructuresandDeterminingEnterprise Values. Part 6:
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EXIT AND TURNAROUND STRATEGIES.
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15. Harvestingthe BusinessVentureInvestment. v v v v




16. FinanciallyTroubledVentures:TurnaroundOpportunities? Part 7: v v v v v v




CAPSTONE CASES.
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Case 1. Eco-Products, Inc. Case 2.
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SpatialTechnology,
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,Chapter 1 v




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUS v v v v v




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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finance methods and tools to help ensure an entrepreneurial venture is successful.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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LEARNINGOBJECTIVES v




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs. LO
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1.3: Indicate several megatrends providing waves of entrepreneurial
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vopportunities.LO 1.4: List and describe the sevenprinciples of entrepreneurial v v v v v v v v v




vfinance.
LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO 1.6:
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Describe the various stages of asuccessful venture‘s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant 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 v




1.1 THE ENTREPRENEURIALPROCESS v v




1.2 ENTREPRENEURSHIPFUNDAMENTALS v




A. Who is an Entrepreneur? v v v




B. Basic Definitions v




C. Entrepreneurial Traits or Characteristics v v v




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




1.3 SOURCES OFENTREPRENEURIALOPPORTUNITIES v v v




A. Societal Changes v




B. DemographicChanges v




C. Technological Changes v




D. EmergingEconomies and Global Changes v v v v




E. Crises and ―Bubbles‖ v v




F. DisruptiveInnovation v




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, 1.4 PRINCIPLES OFENTREPRENEURIAL FINANCE v v v




A. Real, Human, and Financial Capital must be Rented fromOwners (Principle #1)
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B. Risk and Expected Reward go Hand in Hand (Principle #2)
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C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
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D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
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F. It is Dangerous to Assume that People Act Against Their Own Self-
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Interests(Principle#6)
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G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
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1.5 ROLE OF ENTREPRENEURIAL FINANCE
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1.6 THE SUCCESSFULVENTURE LIFE CYCLE
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A. DevelopmentStage v




B. Startup Stage v




C. SurvivalStage v




D. Rapid-GrowthStage v




E. Early-MaturityStage v




F. Life Cycle Stages and the Entrepreneurial Process
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1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE v v v v v




A. Seed Financing v




B. Startup Financing v




C. First-RoundFinancing v




D. Second-RoundFinancing v




E. Mezzanine Financing v




F. Liquidity-StageFinancing v




G. Seasoned Financing v




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE
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SUMMARY
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DISCUSSION QUESTIONS AND ANSWERS v v v




1. What is the entrepreneurial process?
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Theentrepreneurial process comprises: developingopportunities, gathering resources,
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vandmanaging and building operations with the goal of creating value. v v v v v v v v v




2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideasinto commercial opportunities and creatingvalue.
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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. Why do businesses close or cease operating? What are the primary reasons why businesses fail?
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