Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Anderson is a brilliant young tech entrepreneur who partnered with his management team of Daniel and Danielle to create new product that is sure generate

Anderson is a brilliant young tech entrepreneur who partnered with his management team of Daniel and Danielle to create new product that is sure generate immense profits for the foreseeable future. The problem they have is that while they have an amazing product, they have no capital or cash to mass produce and market their amazing product. The three partners have assembled a list of options to acquire the cash to operate their business.

They are as follows:

Venture Capitalists Dylan, Blake, and Adrianna have a large pool of funds and they would be willing to invest all the necessary funds required for a substantial portion of the company's ownership. No loans would be required. They would even offer to put more cash into the company in the future for additional ownership stakes.

Faith, Heather and Taylor are loan managers at a large commercial bank in NY City. They see the new product as viable and have additional funds available to loan beyond the banks' reserve requirement. Because the product is new and the brilliant young entrepreneurs have little credit the bank would require a rate of return of 15% to cover the risks of the loan.

Tyler, Tanner, and Garret work at leading investment bank. They believe they can get a new listing on the NASDAQ stock exchange. Their best employee Faith will help create prospectus and believes there are enough investors willing to purchase stock to raise the required amount of capital plus addition profit for the owners.

Kylie, Heather and Owen work at a competing investment bank and have proposed to offer their services to issue new corporate bonds paying 10% coupon with a maturity of 10 years for the required amount of funds.

Given all these options to finance the future of their company Anderson, Daniel, Danielle have turned to the best consultants for new companies Will and Will for guidance. The two Wills turn to their new finance employees with a difficult task. They must briefly examine each finance option and give pros and cons each.

Examine each of the finance options for pros and cons. The point of the consultants is to inform the owners how each option affects them and their business so they can make the best decision for themselves. Per option give your analysis.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Management

Authors: Eugene F. Brigham, Joel F. Houston

15th edition

1337671002, 978-1337395250

More Books

Students also viewed these Finance questions