SOLUTION MANUAL FOR Entrepreneurial Finance 7th Edition by J. Leach , Ronald Melicher ISBN:978-0357442043 COMPLETE GUIDE WITH RATIONALES 100% VERIFIED A+ GRADE ASSURED!!!!NEW LATEST UPDATE!!!!!!

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, Chapter 1 nl




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUS nl nl nl nl nl




The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In d
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oing so we hope to convey to you the importance of understanding and applying entrepreneurial finance
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methods and tools to help ensure an entrepreneurial venture is successful. We present a life cycle approa
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ch to the teaching of entrepreneurial finance where we cover venture operating and financial decisions f
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aced by the entrepreneur as a venture progresses from an idea through to harvesting the venture.
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LEARNING OBJECTIVES nl




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs.
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LO 1.3: Indicate several megatrends providing waves of entrepreneurial opportunities. LO 1.4: List and d
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escribe the seven principles of entrepreneurial finance.
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LO 1.5: Discuss entrepreneurial finance and the role of the financial manager. LO 1.6: Describe the
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various stages of a successful venture‗s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors. LO 1.8: Understand th
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e life cycle approach used in this book.
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CHAPTER OUTLINE nl




1.1 THE ENTREPRENEURIAL PROCESS
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1.2 ENTREPRENEURSHIP FUNDAMENTALS nl




A. Who is an Entrepreneur?
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B. Basic Definitions nl




C. Entrepreneurial Traits or Characteristics nl nl nl




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




1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES nl nl nl




A. Societal Changes nl




B. Demographic Changes nl




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,C. Technological Changes nl




D. Emerging Economies and Global Changes nl nl nl nl




E. Crises and ―Bubbles
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F. Disruptive Innovation nl




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1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE nl nl nl




A. Real, Human, and Financial Capital must be Rented from Owners (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-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 SUCCESSFUL VENTURE LIFE CYCLE
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A. Development Stage nl




B. Startup Stage nl




C. Survival Stage nl




D. Rapid-Growth Stage nl




E. Early-Maturity Stage nl




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




A. Seed Financing
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, B. Startup Financing nl




C. First-Round Financing nl




D. Second-Round Financing nl




E. Mezzanine Financing nl




F. Liquidity-Stage Financing nl




G. Seasoned Financing nl




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




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, and managing and
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building operations with the goal of creating value.
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2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and creating value. Wh
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ile there is no prototypical entrepreneur, many are good at recognizing commercial opportunities, tend to
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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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Nearly one- nl


half of businesses that fail do so because of economic factors including inadequate sales, insufficient pr
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ofits, and industry weakness. Many of the economic factors are directly tied to financing concerns (e.g.,
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insufficient profits for investors). Almost 40 percent of business failures not citing economic factors cite
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specifically financial causes like excessive debt and insufficient financial capital. The remaining cited rea
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sons for failure include a lack of business and managerial experience, business conflicts, family problem
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s, fraud, and disasters. Many businesses close and fail due to financial trouble which is mostly related to
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lack of sales and unsatisfactory profits.
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