BenBen and JeremyJeremy are opening aa copycopy storestore. There are no competing copycopy storesstores in the area. They must decide how to organize the business. They anticipate profits of $ 550 comma 000$550,000 the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice

By selecting the corporate form of business now,BenBen and JeremyJeremy will

A.

avoid the double taxation that affects partnerships and proprietorships.

B.

be able to transfer ownership without affecting the continuity of the company.

C.

benefit from the ability to exercise mutual agency within a corporation.

Requirement 2. Would you recommend they initially issue preferred or common stock? Why?

You would recommend that BenBen and JeremyJeremy initially issue ? stock because ?

A. a corporation can only issue a small amount of common stock

B. a share of common stock costs more than a share of preferred stock

C. a share of preferred stock costs more than a share of common stock

D. dividends generally must be paid on preferred stock

.

Requirement 3. If they decide to issue $ 2 par common stock and anticipate an initial market price of $45 per share, how many shares will they need to issue to raise $ 2,025,000?