Adam Lane

Consider the following facts and prepare your answers to the three questions:

Adam Lane is young, energetic, smart, and largely broke. In fact, Adam has only two assets of any real value: a recently completed degree in computer science and a 1974 vintage Corvette worth over $15,000.00. The vehicle was a gift from his father. On the liability side, Adam has student loans totaling over $10,000.00.

Adam has spent the past few summers experimenting and thinks that he has come up with an improved voice-recognition system for computers. He wants to contract out the manufacture of his product and set up an organization for its distribution and sale. He already has a name in mind: I-know-that-it's-you Enterprises," or IK Enterprises for short.

Adam's father, Cameron Lane, is retired and reasonably well-off. He has $100,000.00 that he is willing to invest in IK Enterprises, but he does not wish to risk his position and that of Adam's young brother by having any greater commitment to the business.

Adam has also found Diane Levesque, a manufacturer's agent for many products, who is willing to advise Adam on setting up IK Enterprises and to assist in marketing the product. Diane is willing to invest $20,000 and to devote some of her time and expertise to the new business. The bank, under a program for young entrepreneurs, is also willing to lend some start-up capital.

QUESTIONS:

1. Briefly identify and describe the forms of business organization that are available for carrying on Adam's business. Explain what form you would recommend and state two (2) major considerations in choosing your form?