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Suppose you decide (like Steve Jobs and Mark Zuckerberg did) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area, and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO, then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions.a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.b. If you expanded, and hired additional people to help you, might that give rise to agency problems?c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?e. Suppose your company is very successful and you cash out most of your stock and turn the company over to an elected board of directors. Neither you nor any other stockholders own a controlling interest (this is the situation at most public companies). List six potential managerial behaviors that can harm a firm's value.f. The managers at KFS have heard that corporate governance can affect shareholder value. What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.g. What characteristics of the board of directors usually lead to effective corporate governance?h. List three provisions in the corporate charter that affect takeovers.I. Briefly describe the use of stock options in a compensation plan. What are some potential problems with stock options as a form of compensation?J. What is block ownership? How does it affect corporate governance?K. Briefly explain how regulatory agencies and legal systems affect corporate governance.
You expect KT Industries will have earnings per share of dollar 3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend.
You have just received a windfall from an investment you made in a friend's business. What is the present value of your windfall? What is the future value of your windfall in three years (on the date of the last payment)?
After spending $300,000 for research and development, chemists at Diversified Citrus Industries have developed a breakfast drink. The drink, called Zap, will provide the customer with twice the value of Vitamin C currently available in breakfast drin..
She creates a gift of depreciated property (adjusted basis exceeds fair market value) to Marsha, appreciated property (fair market value exceeds adjusted basis) to Jan.
Anaconda Copper Company created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent firm as a dividend would be recorded in the current account subcategory of;
Ensco Lighting Corporation has fixed costs of $100,000, sells its units for $28, and has variable costs of $15.50 per unit.
Groupon is a popular group purchasing and daily deals website. In a recent advertisement, a local restaurant to sold buffet vouchers at a steep discount on its website.
A company issues $20,000,000, 7.8 percent, 20-year bonds to yield 8 percent on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145.
Choose assumptions that absolutely must remain valid. That is, if these assumptions don't hold true, international strategy success is in immediate danger.
Explain what is the operating cash flow for this project - evaluate a project that will increase annual sales
Discuss and explain the Public Company Accounting and Investor Protection Act of 2002? Describe the law in your own words.
Determine the total amount of interest earned by Investment Option C over the five-year period - Find the new amount deposited at the end of each month for the remaining three years.
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